Global economic strains are feeding into mortgage bills. Across the rich world, the ongoing sell-off in government bonds, soaring energy prices linked to the Iran war and tighter monetary policy are combining to push up bank lending rates. Last week, rates on US 30-year mortgages topped 7 per cent for the first time in almost two years. In recent days, Germany’s popular 10-year fixed rate reached its highest since the early 2010s. And as the Reserve Bank of Australia raised policy rates to a 15-year high on Tuesday, its governor warned households to brace for tougher times.

This time, many homeowners are less prepared for the squeeze. During the post-pandemic rate-raising cycle, households had larger savings cushions, while many borrowers were insulated by mortgages fixed at ultra-low rates. Both buffers have since diminished. For first-time buyers there may be a silver lining in some markets if higher rates and sluggish economies drag down house prices. But housing demand across the rich world generally remains robust, driven by demographic shifts, immigration and the pull of job-rich cities. Homebuilding, meanwhile, is constrained by worker shortages, restrictive planning rules and, in the US, tariffs on building materials.

Governments will face more intense pressure to boost affordability. So far, many have leaned on measures to support demand. US President Donald Trump directed Fannie Mae and Freddie Mac to buy mortgage bonds to lower rates. England’s “Your First Home” scheme provides government-backed equity loans for first-time buyers. Such measures may provide temporary relief. But by supporting demand while mostly doing little to increase the stock of homes, they risk making the underlying problem worse. Last year, the US housing supply deficit was estimated to be around 4mn.

Governments cannot rely on quick fixes, or wait for rates and house prices to fall, to restore affordability. Enabling more homes to be built, while making better use of those already standing, offers a more durable solution.