Do Rising Mortgage Interest Rates Threaten Housing Recovery?

Cheap Houses and Soaring Mortgage Rates

The question asked is how will rising interest rates affect a housing recovery? Although it will not stop the chance of a recovery for the property market, it does highlight exactly how serious the overall scenario is!

There has been an increase in the mortgage rates, which for borrowers means an extra payment of about $50 per month. This relates to a medium sized house, of about $170,000, on a 30-year fixed-rate mortgage, with a 20% down payment.

Other questions asked concern whether the United States policy makers, have the conviction and courage to put the brakes on an apparent runaway American budget deficit and in particular, the rising interest rates.

On a more positive note, the houses are cheap enough, that even if another rise were to occur in the mortgage rates, it would not drastically affect for affordability situation. For the housing market, this has been about the only bright spot in a dark picture during the past few years.

However, few Americans have the means or want to invest about $34,000 for a down payment on a house, no matter how reasonable the monthly mortgage payment may be.  It all adds up to the fact that a recovery in the housing market is not on the horizon.

There are those who are willing to consider “adjustable rate mortgages”. With the job market weak, foreclosures building, and lending criteria tighter, there are no indications that the housing market will improve in the near future.

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