Will rising mortgage interest rates stop housing recovery?

Filed in archive mortgage news on June 11, 2009

Mortgage interest rates are still pretty low. But they are rising. That has some economists worried. They're wondering whether increasing mortgage interest rates will slow or even halt the modest recovery that the housing market is now experiencing.

Of course, anything that slows down housing's recovery will also stop any progress on reviving the nation's economy as a whole. That's because the U.S. economy relies so heavily on home sales for its own health.

The Wall Street Journal, always a source of gloomy news these days, wrote an interesting, and pretty scary, story on this subject today. The Journal reported that earlier this week, the interest rate on a 30-year fixed-rate mortgage rose to 5.79 percent. That's up 5 percent from just two weeks ago.

Let's hope that these higher rates really don't slow housing's recovery. There are still plenty of other good reasons to buy a home today. Sellers are still pretty desperate, so they are willing to compromise on everything from price to closing dates to repairs.

At the same time, the housing inventory is high, meaning that buyers have plenty of homes from which to choose.

And if you're a first-time buyer, you can take advantage of the $8,000 federal first-time buyer tax credit.

Today's housing market is still a fragile thing. There's no guarantee that the modest uptick in home sales we've seen the last two months is permanent. Let's hope that rising interest rates aren't enough to knock this beginning recovery off track.