Will Mortgage Rate Rise Hurt Housing Market?


Recent economic reports seem to confirm that our economy is improving. This information has caused a sell-off in the bond market, which results in an increase in the yield on the 10 year treasury bond, the benchmark that lenders use to set mortgage interest rates for borrowers. Mortgage rates for a 30 year mortgage have now climbed over 5% for the first time since May. However, mortgage rates are still lower than they were a year ago. Historically, rates are still near their lows. Sure, had the economic reports continued to be negative, rates may still be under 5%. What good did that really do for the housing market over the past 6 months. Many potential homeowners remain tentative about committing to a mortgage due to a sense of uncertainty as to their job security. Now that the economy is improving, many should feel more confident about their financial future and a commitment to a mortgage payment, even if it is a little higher due to the recent rise in rates. This Wall Street Journal article suggests that the recent rate increases may help, rather than hurt the housing market. Click below to read article.

http://blogs.wsj.com/developments/2010/12/17/will-mortgage-rate-rise-hurt-housing-market/


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