There’s “no major correlation” between mortgage rates and home prices, although abrupt increases can have short-term impacts, Fannie Mae Chief Economist Douglas Duncan tells the Wall Street Journal’s Nick Timiraos, who looks at “What rising interest rates mean for home prices,” on the Developments blog.
The big question for real estate brokers and agents is what happens to home sales. CoreLogic data shows applications for purchase mortgages haven’t changed much during the last two years, as falling mortgage rates helped offset the impact of rising home prices.
When mortgage rates climbed rapidly from 7.1 to 9.2 percent in 1994, that slowed the housing recovery in progress at the time, Timiraos notes. “If higher rates stick, it remains to be seen just how quickly buyers and sellers will adjust to that over the next few months.” Source: blogs.wsj.com
