Rising mortgages eclipse home values…

From Zillow:

Image by iStock.com/peeterv

A combination of high home values and rising interest rates has sparked concerns that the housing market may be due for a slowdown. The current economic expansion is now the second longest in U.S. history. If it continues beyond July 2019 – and a recent survey of experts suggests it will – it will be the longest expansion in U.S. history.

When it does arrive, the next recession is unlikely to be triggered by the housing market. According to the panel of experts surveyed by Zillow earlier this year, the most likely trigger is monetary policy – which is where fears about rising interest rates come in. Rates have hovered at or just slightly above historic lows for much of the past decade; the last time American consumers had to grapple with a sustained rise in interest rates was during the first half of 2006.

Since the Federal Reserve began acting in 2015 to raise short-term interest rates again, long-term interest rates – including mortgage rates – have remained surprising low. They had withstood the Fed rate hikes through 2018 without moving much until this fall. Since the last Fed move on September 27, the average rate for a 30-year fixed-rate mortgage has climbed about 15 basis points to around 4.7 percent.

Some worry that rising rates will rapidly eat into mortgage affordability, limiting what home buyers can spend and putting the brakes on home value appreciation. Mortgage affordability is already stretched in some parts of the country, even with low mortgage rates…

Continue reading at Zillow…

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