Mortgage interest rates hurt refi boom
Mortgage interest rates in the U.S. have charged up over the past couple of weeks, and that's putting a chill on the home refinancing boom. Jeff Tyler reports why investors are worried and what could happen next.
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Bill Radke: Mortgage interest rates in the U.S. have charged up over the past couple of weeks. That is putting a chill on the home refinancing boom. Reporter Jeff Tyler tells us what's going on and what might happen next.
Jeff Tyler: Mortgage rates are closely tied to U.S. Treasury bonds. Investors worried about the ballooning federal deficit are shying away from buying the government's debt.
The Federal Reserve has been pumping money into T-bills to keep rates down. But that may not be enough to bring mortgage rates back to the historic lows seen in March.
Gus Faucher is director of macro-economics at Moody's Economy.com:
Gus Faucher: We may return to those lows briefly, depending on what the Fed does. But I think over the long run, mortgage rates will be moving higher.
Some consumers considering refinancing are betting that the upward trend is temporary.
Jim Pair is incoming president of the National Association of Mortgage Brokers:
Jim Pair: They're going to wait a little bit longer to re-fi, hoping that rates will come back down a little bit.
At the same time, new rules for people purchasing a home are also putting a damper on the mortgage business. Pair says stricter credit and income requirements are keeping a lot of people out of the housing market.
I'm Jeff Tyler for Marketplace.
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