Carney Warns Of Uk ‘false Dawn’, Overheating Housing Market

When Will Rising Mortgage Rates Hurt The Housing Market?

“If recovery were to falter, if additional stimulus were to be required, we would consider whether to provide additional stimulus,” he said. “Our job is to make sure that (the recovery is) not another false dawn that we saw a few years earlier, and to make sure that as soon as possible, this economy reaches a form of sustained velocity so that it can sustain higher interest rates and continue to grow,” he added. Has Mark Carney inherited a UK recovery? Helia Ebrahimi, CNBC’s UK business editor discusses whether the new Bank of England governor, Mark Carney, is likely to increase interest rates on the back of improving economic data. Regarding the U.K.’s bubbling housing market, Carney said that lenders could raise capital requirements for mortgage lending to prevent overheating, as well as limit prospective house buyers’ borrowing in line with their income.
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Follow Comments Following Comments Unfollow Comments Jed Kolko, Chief Economist at Trulia, digs into recent history to reveal how todays rising rates may be more bark than bite. Typically, spiking mortgage rates take a big chomp out of refinancing immediately and smaller nibbles out of sales three months later. Longer term, the impact of rising rates is typically offset by stronger economic growth. Ever since mortgage rates started their steep climb in early May, weve all been on high alert, watching how higher rates will homepage affect the housing market. For a would-be buyer calculating the mortgage payment on their dream home, the effects are obvious: the increase in the 30-year fixed rate from 3.59% in early May to 4.73% at the end of August (according to the Mortgage Bankers Association, or MBA) means a 15% increase in the monthly payment on a $200,000 mortgage. That should deter homebuyers and reduce mortgage applications, sales, and prices, right? In theory, yes, but of course the real world is much more complicated.
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