Will Rising Mortgage Rates Cool the Market?

Will Rising Mortgage Rates Cool the Market?

What a FANTASTIC question that Realtors and their clients are certainly thinking.Β  Please enjoy this article from the Daily Real Estate News.

A big jump in mortgage rates over the past two months may start to cool the rapid rise of home prices in the second half of the year, The Wall Street Journal reports.

Mortgage rates have shot up from lows of 3.59 percent in the beginning of May, to 4.58 percent during the last week of June, according to the Mortgage Bankers Association. Rates are at their highest levels in two years.

β€œA rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10 percent, so the recent move in rates just made homes about 10 percent more expensive to buyers who need to finance their purchase,” The Wall Street Journal reports.

Still, economists say mortgage rates at 4.5 percent or 5 percent is still very affordable by historical standards. Merrill Lynch analysts say that home prices would have to rise by 20 percent or mortgage rates would have to soar to around 6 percent to chip away at housing’s affordability.

Some economists see rising mortgage rates as a positive. John Burns, chief executive of John Burns Real Estate Consulting, says that rising rates produce more sustainable price increases. β€œI don’t think it’s the end of price increases, but I think they’re going to moderate significantly,” Burns told The Wall Street Journal.

Source: β€œWhy Home-Price Gains Will Slow Amid Higher Mortgage Rates,” The Wall Street Journal (July 8, 2013)

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I read this article at:Β  http://realtormag.realtor.org/daily-news/2013/07/09/will-rising-mortgage-rates-cool-market?om_rid=AACmlZ&om_mid=_BR3FkGB8zy7Id2&om_ntype=RMODaily

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Sabrina Caton - The Caton Team Realtors

Sabrina & Susan are native Californians - born and raised in the Silicon Valley with a passion for Residential Real Estate. A mother and daughter-in-law duo called - The Caton Team. With over 35 years of combined, local Real Estate experience and knowledge – would’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time. Call | Text at: 650-799-4333 | Email Info@TheCatonTeam.com The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true. The Peninsula is our backyard - let us help make it yours. We represent Buyer’s and Seller’s throughout the Bay Area. The Caton Team – Susan & Sabrina A Family of Realtors Effective. Efficient. Responsive. What can we do for you?

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