Mortgage interest rates have been sharply rising over the past few months. This growth is especially profound when compared to the record-low rates Americans have enjoyed for the past couple of years.
Now, mortgage rates are at a 4-year high, and some experts are worried about the threat it poses to an already strained housing market.
Higher mortgage rates typically don’t affect much outside of housing affordability. In today’s housing market, however, there are legitimate questions about how much pressure the economy can take if rates continue to rise.
“The question is going to be throughout the year whether or not and at what level are rates too high for the economy,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co.
- Interest rates for the average 30-year fixed rate mortgage hit a 4-year high of 4.73%
- Home affordability is deteriorating with higher rates, which are expected hit 5% by 2019
- An increasingly unaffordable housing market is forcing many first-time buyers to postpone homeownership plans
Mortgage applications dropped last week for the fourth time since mid-March, down 0.2 percent, as the average 30-year fixed loan rate rose to 4.73 percent, according to the Mortgage Bankers Association.
“We’re going to have to continue this back and forth because the question is going to be throughout the year whether or not and at what level are rates too high for the economy,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co., said in an interview at Bloomberg’s New York headquarters.
“Deteriorating home affordability could hurt demand by making it more difficult for first-time home buyers to enter the market,” Lewis Alexander, chief economist at Nomura Securities International, wrote in his daily commentary for April 24.
View the original article at Bloomberg