How Will Higher Mortgage Rates Impact the Housing Recovery

By
Mortgage and Lending with Canopy Mortgage, LLC NMLS 124492

I'm sure you have heard it a thousand times from mortgage professionals such as myself as well as other Realtors. Mortgage rates will rise in 2010. Don't believe me?

Did you catch this 5 minute video of Lawrence Yun, the Chief Economist of National Association of Realtors, talking about mortgage rates on CNBC Realty Check today?

Even Lawrence Yun states that no one should expect mortgage rates to stay below 5%. Furthermore, he states that mortgage rates have nowhere to go but up and that higher mortgage rates will be a negative for the housing market. He does surprisingly foresee a quicker housing stabilization and economic recovery.

Also in the video is Matt Garrison, Managing Director of the Matt Garrison Group (Coldwell Banker's #1 Sales Team in 2006), who agrees with the fact that mortgage rates will go up. Where he disagrees with Yun is the severity of the impact on housing affordability and pricing stability.

In my opinion, as an active mortgage planner in Northwest Indiana for the both purchases and refinances I believe Garrison to be more accurate on his assessment of the negative impact of higher mortgage rates. The question is no longer about whether mortage rates will rise? The real question of the moment is...

How Will Higher Mortgage Rates Impact the Housing Recovery

 

Five Recent Blog Posts of Interest:

  1. This Is The Week Ahead for December 27th
  2. Weekly Blog Update for the Week Ending December 26th
  3. If Tight Lending Threaten U.S. Recovery, What Can We Do
  4. What Will You Do This Holiday To Give Back To Your Community?
  5. Hurry Realtors® - Get Your Flip Camcorder & Free Accessory Today

FEATURED Blog Posts on ActiveRain:

Posted by

Like what you see? Fantastic! I welcome your connection at any of these online communities.

http://twitter.com/myCMPS                http://www.facebook.com/jamesbarath                http://WelcomeHomeNWI.com                http://linkedin.com/in/jamesbarath                http://feeds.feedburner.com/WelcomeHomeNWI

Looking for more specific real estate and mortgage advice for Northwest Indiana and/or the greater Chicago land area please visit my Welcome Home NWI website at www.WelcomeHomeNWI.com.

Need more expert advice? Call, text or email. Contact James Barath at GVC Mortgage, Inc.

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Deborah Grimaldi 12/29/2009 01:20 AM
Topic:
ActiveRain Community
Location:
Indiana Lake County
Groups:
Active Rain Newbies
Realtors®
Realtors Needing the services of the Lending Powers
1st Time Buyers
Responsible Mortgage Lenders
Tags:
mortgage acumen

Spam prevention
Show All Comments
Rainmaker
430,281
Ellen Crawford
Crye-Leike REALTORS® - Alpharetta, GA
Alpharetta Real Estate Agents & Alpharetta REALTOR

NAR's numbers over the last few years have been so self serving that I just do not pay attention to their spin anymore.

Dec 28, 2009 11:27 AM #1
Rainer
18,995
Christine T.
C.A.T. Construction and Home Staging & Design - Crown Point, IN

Predicting a second surge once we near the end of the tax credit will help if the prediction is right. The numbers everntually are going to go up it's just a fact. How else do we jump start this housing market? Yeah, people are going to hate it, but get over it. I was at 8.75 on my first home 9 years ago and if memory serves (and it does) we were in an awesome sellers market with high interest rates (compared to today).

 

 

Dec 28, 2009 12:21 PM #2
Rainer
70,920
James K Barath, CMPS
Canopy Mortgage, LLC - Crown Point, IN
FICO Pro, Certified Military Housing Specialist

Ellen - Glad you said it. I've heard the same sentiment from Realtors across the country.

Christine - As a basic tenet of finance, rates are all relative. Mortgage rates are not historically in a vacuum void of other market conditions as the Fed has done this year. When the pressure is released, things will return to normal. It is just a matter of when.

Dec 28, 2009 03:17 PM #3
Rainmaker
400,528
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

James - There is only one direction we know for SURE... rates will go up. They MIGHT go down (unlikely, but it could happen), but they will surely go UP.. we have no doubt about that.

Dec 29, 2009 04:34 AM #4
Rainmaker
131,694
Michele Reneau
Certified Staging Professional (CSP) Elite Instructor - Summerville, SC
Realtor, GRI ~ Charleston, SC Relocation Experts Team

James-I don't know why people can't see the writing on the wall.  The Fed cannot continue to artificially hold rates down. I think they should have gone up a long time ago and that would be a better catalyst for folks on the fence to get off quick. It's at 5% and some people are still on the sidelines.

Dec 29, 2009 09:34 PM #5
Rainer
70,920
James K Barath, CMPS
Canopy Mortgage, LLC - Crown Point, IN
FICO Pro, Certified Military Housing Specialist

John - You are correct on the fact that mortgage rates could go down. Every thing runs in cycles. In the near term though, they are definitely poised for an increase.

Michele - I think it comes down to the consumer being deaf to the cries of higher mortgage rates as that has been a reoccurring mantra of the real estate industry all year. This could also be said about the $8,000 tax credit.

Dec 30, 2009 05:38 AM #6
Rainer
6,841
Lorelie LeBrun
RE/MAX Central Realty - Orlando, FL

I remember 17% interest rates in the 80s.  This brought about assumeable mortgages and FNMA rewrites as well as lots of Seller Financing.  I rejoiced when I was able to get an 8% mortgage in the early 90s.   The low 4% rates drove prices  up unsustainably creating the current panic of sellers who cannot sell for the balance of the mortgage and must now short sell.  Maybe a 6% or 7% rate is ideal.

Dec 31, 2009 12:26 AM #7
Rainer
70,920
James K Barath, CMPS
Canopy Mortgage, LLC - Crown Point, IN
FICO Pro, Certified Military Housing Specialist

Lorelie - Since you have been in the real estate market long enough, you understand the cyclical nature of housing and mortgage rates. Unfortunately, there is a great disconnect between buyers of homes within the past 2-4 years. Whether a mortgage rate in the range of 6-7% is an ideal rate, that is for another discussion.

Dec 31, 2009 04:45 AM #8
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
70,920

James K Barath, CMPS

FICO Pro, Certified Military Housing Specialist
Ask me a question
*
*
*
*
Spam prevention

Additional Information