|
The economy is growing and there are job gains, so consumers have the financial wherewithal to purchase homes. Sure, the rise in rates has been inhibiting buying recently. A lot of the boom markets that boomed over the last several years are cooling off and home sales are dropping. But if the economy were in a recession, this would be worse. And mortgage rates aren’t rising too high — they’re only going up to 7% by the end of the year. |
The last two years of the boom were exaggerated because of lending. There were more loans, such as negative amortization loans, allowing people to put off their debt payments until later. In some metropolitan areas, this exaggerated home prices and increased them further than they should have gone. To that extent, there’s some risk in those local markets. For example, if you take any local market in California, they’ll have interest-only loans and adjustable-rate mortgages because prices got too high. If mortgage rates increase, then some of those markets are vulnerable. But the forecast isn’t for interest rates to go up significantly. I have mortgage rates going to 7%, not to 10%.
search for : mortgage rates, negative amortization loans, interest-only loans
