Many countries around the world saw interest rates fall to record lows in aggressive policy efforts to combat the 2020 recession. As a result, mortgage rates in 2021 were lower than those in January 2020 in many of the world’s wealthiest countries.
Home Mortgage Rates Hit Record Lows Worldwide in 2021
As in the United States, mortgage interest rates in Canada, New Zealand, and Australia hit record lows, according to CoreLogic.
Canada saw rates drop from 4.0% in January 2020 to 3.2% in June 2021. New Zealand dropped its interest rates from 3.5% in January 2020 to 2.55% in June 2021. The US dropped rates from 3.6% to 3.1% and Australia saw its rates fall from 3.92% in January 2020 to 2.0% in June 2021, a decline of -0.92%.
Home Price Growth Fast-Tracked in 2021
One of the results of declining interest rates was that buyer demand jumped steeply (as intended by these countries’ central banks) while the pandemic and its associated recession curtailed for-sale housing supplies. From the end of Q4 2020 through June 2021, each country mentioned in this post experienced double-digit annual home price growth. In the US, Canada and New Zealand, home price growth tripled and in Australia, home price growth nearly doubled.
Take a look at comparative home price growth by country:
- US – from 4.9% to 17%
- Australia – from 7% to 14%
- Canada – from 5.1% to 15.1%
- New Zealand – from 7% to 23%
Capital Cities Had Faster Home Price Growth than Largest Cities
Prices for single-family detached homes have been shooting up more quickly than single-family attached homes due to buyers’ preferences for more privacy and space both inside and outside houses. Likewise, national capital cities with lower densities and fewer attached homes have experienced more home price growth than more tightly packed metro cities around the world.
Take a look:
- US – New York +5.1% and Washington DC +14.1%
- Australia – Sydney +14.7% and Canberra +23%
- Canada – Toronto +15.1% and Ottawa +25.2%
- New Zealand – Auckland +18.5% and Wellington +30.9%
As the pandemic cools (if ever) and the global economy recovers, CoreLogic anticipates mortgage rates to gradually rise, additional for-sale supplies to increase and cooling home price growth into next year.
Thanks to CoreLogic.