2018-04-27 —

If the average mortgage rate rises to 5.2% -- perhaps in the second half of this year -- it will be the highest since 2010. And 5.5% would take mortgage rates back to levels not seen since 2008... But there is a difference between those higher mortgage rates now and the same rates back then: Home prices!


The pain threshold for the US housing market is at 6% (average 30-year fixed-rate mortgage, as measured by the MBA, conforming, with 20% down)... There may well be a cold-shower effect at around 5% that will sober up some home buyers. But pain will set in at around 6%. People have forgotten what a 6% mortgage feels like though that's still a historically low rate. And they've never had to finance homes at these sky-high prices at 6%. That'll be the new thing. And something will have to give.

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