Real Estate News Published August 07, 2012 By Eric Dale
Mortgage Rates Jump, Could Hurt Housing Recovery

For the past few months mortgage rates have sunk to record lows, but now they're on the rise. The question is: Will higher mortgage rates negatively affect recovery of the housing market?

According to Zillow's Mortgage Marketplace, the rates for 30-year fixed-rate mortgages jumped ten basis points from 3.34 percent last week to 3.44 percent today.

“Although there were a number of events this past week with the potential to move markets — announcements from the Fed and the European Central Bank as well as Friday's jobs report — rates ended the week up only slightly from where they started,” said Erin Lantz, director of Zillow Mortgage Marketplace.

The problem is that as mortgage rates rise, buyers are bumped out of the market because they simply cannot qualify for loans. There's a significant difference between a $500,000 mortgage at 3.4 percent and one at 4.4 percent.

“There's a real risk interest rates could climb up beyond 6% or 6.5%, which can immediately shut down the housing recovery and undermine the national economy,” says Bernard Baumohl, chief global economist at the Economic Outlook Group.

Chances are that mortgage rates will rise, but will be kept relatively low. For the housing market to regain its glory, that's what needs to happen.

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Eric M. Dale has actively been involved in financing and investing for over 20 years. As the CEO of Capital Funding Corporation he has personally completed over $5 Billion in transaction funding and has consulted on numerous projects surrounding real estate and oil and gas.


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