There is no doubt that historically low mortgage interest rates were a major factor in the housing recovery over the last several years. The Mortgage Bankers Association, Fannie Mae, Freddie Mac
and the National Association of Realtors
are all projecting that mortgage interest rates will move upward in 2017. Janet Yellin, The Chair of the Federal Reserve, just annouced today that the Fed will likely resume raising interest rates later this month. Increasing interest rates will definitely impact purchasers
and may stifle demand. In a recent study of industry experts, “rising mortgage interest rates, and their impact on mortgage affordability”
was named by 56% as the force they think will have the most significant impact on U.S. housing in 2017. If rising rates slow demand for housing, home values will be impacted. Pulsenomics,
a panel of over 100 economists, investment strategists, and housing market analysts, asking the question “In your opinion, at what level will the 30-year fixed rate mortgage rate significantly slow home value appreciation?” The chart above shows that m
ost experts believe that rates would need to hit 5% or above to have an impact on home prices.