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Impact of higher mortgage rates?


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July 22, 2005

Impact of higher mortgage rates?

Amey Stone

This week Greenspan indicated that the Federal Reserve is likely to keep raising rates for the foreseeable future (or at least two or three more times) this year. That news contributed to another small bump up in mortgage rates.

According to Bankrate.com's July 20 analysis, rates on a 30-year fixed average 5.78% nationally, up from 5.76% a week ago.

Of course, mortgage rates below 6% (they've been that low for nearly four months), are unlikely to cool the housing boom.

And I have another theory I'd like to try out. I think a slight up tick in rates may actually stimulate the housing market. Most people don't understand that Greenspan only affects short-term rates, not necessarily mortgage rates. So when they are considering purchasing a new home knowing that rates are near historic lows -- and then they hear Greenspan plans to keep raising rates and mortgage rates are rising -- it may create a rush to buy.

What do you think?

07:45 AM

Mortgage Rates

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Listed below are links to weblogs that reference Impact of higher mortgage rates?:

? Anybody Still Sitting On The Fence? from Realty Baron : Baron Briefs

We say...no. Fear of rising rates my spur refinancing, but we can't imagine... [Read More]

Tracked on July 22, 2005 10:32 AM

? Could Rising Rates Stimulate The Housing Market? from Mortgage Blog: Home Loan Rates, Tips, News & More

Here is an interesting article from Amey Stone back in July speculating that a bump in mortgage rates might stimulate the housing market. While I think she was right in a sense as the market was hot a lot of people were not discouraged by early rise ... [Read More]

Tracked on November 21, 2005 03:54 PM

Interesting commentary Amey. The housing market does appear to be cooling down but I think you had a valid point in July. Have your views changed?

I discussed your article here:

http://mcmortgage.blogspot.com/2005/11/could-rising-rates-stimulate-housing.html

Posted by: MCMortgageBlog at November 21, 2005 03:56 PM


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