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?