Setback for Housing Market as U.S. Mortgage Rates Surpass 5%
Thursday, April 1st, 2010
No matter how you look at it, passing the 5 percent barrier for mortgage rates is a psychological event, and it could have a strong negative impact on the U.S. housing market as we enter into what is normally the strongest sales season of the year in the United States for homes.
This is the third week in a row mortgage rates have risen, and now stand at 5.08 percent.
Obviously lenders are thinking they can increase rates in this usual busy season because those wanting to buy houses will buy them anyway, yet I'm not sure that's a healthy way of thinking, as it's yet to be proven whether or not people are really ready to enter the housing market yet in the U.S.
So what I'm thinking is it's premature to hike up interest rates at this time, although I understand why they're doing it, as they're trying to find the upper end of the market where they can generate sales while making the highest profit they're able to.
To me that's risky for the reason stated above, as it's still a very down economy in the U.S, and even though there's a lot of hype about a strengthening recovery, consumers will have to believe and experience that before they loosen up their wallets in a big way.
Interest rates on 30-year fixed-rate mortgages in the U.S. are what have risen to 5.08 percent on average according the a survey by Freddie Mac.
Article by Gary B
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: housing market , interest rates , lenders , mortgage rates , us housing market
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