By Glenn Kelman
“The long-awaited day of reckoning is here,†Chris Farrell wrote in Forbes this week. “The era of historically low interest rates is over.†Mortgage interest rates began to increase in the first week of May, going from 3.35% to the headline-grabbing rate of 4.36% as of Friday.
What happened? Last Wednesday, Federal Reserve Chairman Ben Bernanke announced that if the economy continued to improve, the government would stop buying $85 billion in bonds each month by mid-2014. The stock market lost 3% of its value in three days.
Everyone wants to know how American home buyers will react to the rate increase, but it usually takes months for people to buy a home, and months more for records of such sales to become public.
In the meantime, the real estate industry remains bullish; confidence among home builders hit a seven-year high last week.
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