How rising mortgage rates may affect the recovery | South Salem Real Estate

The news of rising rates has caused bond investors to begin selling out of their 10-year Treasury positions, driving yields for these bonds above 2%. Since mortgage rates correlate closely with Treasury yields, they have followed suit, rising about a quarter of a percentage point in just a week, writes Forbes.

“In Middle America I don’t see much impact since homes are so affordable,” explains Lawrence Yun, chief economist of National Association of Realtors. “The more expensive coastal regions… is where one will begin to feel the first decline or impact.”  

Yun suspects that California metro areas and east coast hubs like Boston, New York and Washington D.C. could begin to experience slackening sales because low-interest monthly mortgage payments in these relatively pricier places have helped make homes seem more affordable to more buyers despite the fact that relative to income, principal amounts are still expensive.

How rising mortgage rates may affect the recovery | HousingWire.