Fed Chairman Ben Bernanke said this week that one of the biggest risks facing the economy right now is that higher interest rates could stop the housing recovery in its tracks. Housing is now the brightest sector of the economy, and if it stumbles badly, you can expect the Fed to reverse the taper and buy more bonds, writes MarketWatch.
The rebound in housing certainly looks robust enough to cope with somewhat higher rates, but no one can know in advance how lenders and would-be borrowers will react to the news that the rate on a 30-year fixed mortgage has risen from 3.45% in April to 4.51% today. Rates are up compared with last month and last year, but in historical context, they’ve rarely been lower.