Rising Mortgage Rates A Sign Of A Stronger Economy

For many years following the financial crisis, interest rates hovered near historic lows. Partly, this was because keeping rates low was a way to encourage investment in the economy. However, as the economy grew stronger, the expectation has always been that rates would begin to rise. And, now that economic fundamentals are stronger, rates have indeed pushed upward. Some evidence of this can be seen in the most recent mortgage application survey from the Mortgage Bankers Association. According to their weekly look at rates and application demand, mortgage rates were up again last week and are now at a four-year high. Mike Fratantoni, MBA’s chief economist, said the increase is a reaction to strengthening economic factors. “The drumbeat continues,” Fratantoni told CNBC. “Inflation is increasing, as are deficits, and the economy and job market continue to look strong, and rates are higher as a result.” Still, despite recent increases, mortgage rates remain well below what is considered normal by historical standards. Additionally, though rates are higher than they were last year at this time, demand for loans to buy homes is still 3 percent higher than at the same point one year ago. More here.

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