3 Reasons Mortgage Rates Are Rising
3. A quiet Eurozone
For months, economists (and some real estate agents) were wringing their hands over the sovereign debt crisis in Europe. Financial troubles in Greece, Italy, Portugal and other European countries sent tremors across the globe, causing anxiety among financial markets, and among mortgage lenders, who feared a major global financial crisis. But in August, at least, Eurozone debt has held less sway in media headlines and in the market, and the relative quiet across the pond has been good for the global economy.
In reverse, rising mortgage rates likely had an economic impact. The Mortgage Bankers Association reports that U.S. mortgage applications fell by 7.4% for the week ending August 17, 2012.
A decline in mortgage applications at a time when mortgage rates are climbing may be a coincidence, but that's unlikely. Historically, when homebuyers sense mortgage rates are higher (thus making homes more expensive), they're less likely to try and land a mortgage.
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A one-month snapshot does not a housing market make. But the last 30 days have seen a steady hike in mortgage rates.
If that continues in September, then it's a trend, and could be a big one.
--By Brian O'Connell
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