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November 24, 2014

Freddie Mac: Rising Mortgage Rates 'Will Not Derail the Recovery'

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Freddie Mac: Rising Mortgage Rates 'Will Not Derail the Recovery'

Rising mortgage rates shouldn’t stall the housing recovery, according to Freddie Mac’s latest U.S. Economic and Housing Market Outlook. 

After steady rises the last few weeks, the 30-year fixed-rate mortgage -- the most popular among home buyers -- is expected to remain around 4 percent during the second half of 2013. 

Despite the rising rates, housing still remains affordable. According to Freddie Mac economists, it would take interest rates rising closer to 7 percent before families earning median incomes would face housing affordability issues. 

"The recent upturn in interest rates is sparking fears among some that the nascent economic and housing recoveries will be choked off before they produce sustained growth," says Frank Nothaft, Freddie Mac’s chief economist. "Nothing in the recent trends suggests that we need to fear a major slowdown. A gradual rise in interest rates will not derail the recovery, and are an indication that the overall economic situation is improving."

Source: Freddie Mac and “Don’t fear rising mortgage rates just yet: Freddie Mac,” HousingWire (June 18, 2013)

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