What's going on?

Higher interest rates are pushing down demand for mortgages, according to data released on Wednesday � highlighting how difficult it is for first-time buyers to get on the housing ladder.

What does this mean?

Perhaps the most notable development in markets so far this year is the big government bond selloff. As bonds go down in price, the returns (a.k.a. yields) that they offer investors go up (why? click here). Mortgage rates are inextricably tied to these bond yields. As bonds have sold off, mortgage rates in the US have hit their highest level in over four years � meaning that it�s getting more expensive for people to borrow in order to buy homes.

Why should I care?

For you personally: Buying your first home is getting harder.

US mortgage rates are up about 0.5% this year alone (tweet this) � a pretty big rise when you consider how much extra interest that means you�d pay on a typical mortgage. All else equal, higher mortgage rates make owning a home less affordable because it makes it harder to pay the monthly mortgage amount. Meanwhile, in the US, home prices are up 5% on average over the past year, making homes even less affordable. Perhaps it�s no surprise that first-time buyers make up a substantially smaller proportion of all home buyers than they did a year ago.

The bigger picture: Higher mortgage rates are a global thing.

Mortgage markets work slightly differently in each country, but the same basic principle applies in most places: higher bond yields mean higher mortgage rates. And since these are going up in most major economies, there�s a good chance that potential homeowners are facing an affordability squeeze wherever you are. In some instances, this may be offset by declining house prices (like in certain parts of London), but the point is broadly the same everywhere: higher interest rates are making it tougher to afford a home.