Rising Interest Rates Dampen Housing Recovery

Rising interest rates are bad news for the housing market, analysts say. "Mortgage rates at these levels will hobble the [housing] recovery, and it was just the beginning of the recovery," says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. The Federal Reserve stepped in mid-week to buy Treasurys and announced it will buy more next week, but that didn’t seem to do much to lower rates. Meanwhile, the Obama Administration’s plan to assist home owners current on payments but lacking enough equity to refinance appears to be failing – only a few hundred people have been able to take advantage of the program. Analysts say slow-moving lenders, low appraisals, low credit scores and second mortgages all reduce the likelihood that a borrower in good standing will be able to refinance.

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