Real Estate Columnist Is Mixed Up About Rising Mortgage Rates

| By Alec Foege

| Posted Sep 7th 2010 5:20PM

Wall Street Journal reporter Kelly Evans deserves much praise for her sometimes insightful "Ahead of the Tape" column. But in the case of her entry today, titled "The Good News About Rising Mortgage Rates," her logic and conclusion are dead wrong. Evans claims that "one reason buyers have remained hesitant [about buying a home] is that there is little reason to act if rates may fall even further." Hence, she suggests, climbing mortgage rates will encourage buyers still on the sidelines to make a move. Fat chance: With unemployment still hovering near 10 percent and mortgages harder to obtain than ever -- even for borrowers with excellent credit -- it doesn't matter what the rates are if folks can't afford or obtain them. Never mind that Evans's own paper reported today that housing inventories increased for the eighth month in a row. That means that it will be a long time before we're out of this housing mess, no matter how many people buy. As for those who still can't afford to, let them eat cake.

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Mortgage rates are at an all-time low. What's keeping you from buying?
Lender requirements are too strict. I can't qualify for a loan.	5025 (39.5%)
I have to sell my current home first.	4348 (34.2%)
You could bring the interest down to 0 percent -- I still couldn't afford the monthly payments.	3359 (26.4%)

Mortgage rates are at an all-time low. What's keeping you from buying?

Lender requirements are too strict. I can't qualify for a loan.

5025 (39.5%)

I have to sell my current home first.

4348 (34.2%)

You could bring the interest down to 0 percent -- I still couldn't afford the monthly payments.

3359 (26.4%)

Reader Comments (2)

by James Hajdinaj - September 8th 2010 @ 7:37PM

I agree with the idea of raising the interest rates to urge the buying, but in very moderate level in this situation. Because the economical enviroment allows it (close to deflation )and phsycology (as in many issues for the human beings)is playing a big role, making the people waiting for lower house prices infinitly. The other way of thinking disregards the role of financial institutions completely (regardles that those are not primary)and indirectly are only for the self regulatory properties of free market theory. I am economist educated overseas (proud of it ) and glad that many of my thinking about this economy state so far has been correct.
But I understand that political infighting has influenced bad on the speed of recovery and meantime the goverment is as a big trailer that can turn properly only with slow speed.

Reply | Report

by Get Real - September 23rd 2010 @ 8:36PM

The public is smarter than what the government wants. What else do you expect when you have conned the entire nation that it's either college, or wash dishes, and have even fueled an education bubble with predatory lending (student loans), and free money to attend college? This is why tuition prices have skyrocketed.

Low interest rates do not help buyers. They help sellers by allowing buyers to borrow more money to pay for an overpriced home. Without cheap money, overpricing gets you no where. They want to present low interest rates as a reason for buyers to come forward? What are they smoking? Marijuana has not been legalized yet. Stop smoking it.

2 Comments / 1 Pages