Brace for Higher Mortgage Rates
Wednesday, August 7, 2013
U-T San Diego -- To his credit, President Barack Obama has now officially tossed the nation’s $9.4 trillion home mortgage market into the Washington meat grinder.
If we’re lucky, the resulting policy sausage will attract private capital into the government-dominated market without setting the stage for the next financial crisis and yet another taxpayer bailout.
...That would cut the number of home sales in most markets, according to research by Norm Miller, a professor at the University of San Diego’s Burnham-Moores Center for Real Estate.
But in supply-constrained markets like San Diego’s, higher mortgage rates tend to depress prices, particularly in the lower-priced market segments where buyers are more sensitive to jumps in their monthly payments.
“So in the under-$400,000 market, if mortgage rates went from 4.5 percent to say, 6 percent, prices would decline slowly by about 10 percent,” Miller said. (Full story)