Saturday, March 11, 2006

Real estate rates could hit 7% by summer

Fed's inflation fight gets more complicated

The high for mortgage rates in '03, '04 and '05 was 6.5 percent; we're almost there, and likely to rise above. The word "seven" may be in vogue by summer.

February employment data confirmed a solid economic expansion underway, and a new pattern of wage growth on top of energy-price pressure is pushing the Fed from a neutral rate target toward a restrictive one. Late in all Fed tightening cycles the bond market comes to the depressing conclusion that the Fed will keep going forever. It won't, of course, but a market convinced that the Fed would almost be done at 4.75 percent on March 28 now faces a sure-thing 5 percent in May, a probable 5.25 percent in June, and an ultimate stopping point higher than that.

Reade the entire Inman News article at Citywide Services

1 comment:

Anonymous said...

Does this contribute toward the impression that we'll finally start seeing more slowdown in home sales and the real estate "bubble" as a whole?