Higher Mortgage Rates Are Not a Threat

by: Calafia Beach Pundit

Here's where 30-year fixed rate mortgages stand today, according to BanxQuote. Yes, they have moved up, but not by much, and they are still very close to all-time lows. They were a whole lot higher in 1999 and 2000 and the housing market was booming, as was the economy. Indeed, it is precisely when the housing market and the economy are booming that interest rates tend to be high. High interest rates are the result of a strong economy (and often a tight Fed); they don't drive the economy. Well, high rates do sometimes kill the economy, but usually that happens only after an extended period of Fed tightening, which makes money scarce—that's what kills the economy. Today that is simply not a problem.

If mortgage rates move higher it will be because there is a lot of demand for mortgages, which in turn will happen if the housing market recovers. Higher interest rates are not something to worry about right now. They are something to hope for, truth be told.