Though interest rates remain at historic lows, their upward trajectory in recent months puts the housing market’s recovery at risk, according to Avison Young broker Jason Meister, who added that the government’s interference in free market mechanisms had contributed to the problem.
“The housing market’s been propped up,” Meister said in an appearance on Fox Business last night. “We don’t have the free market working,” he added, and said that the Fed’s recent decision to taper the economic stimulus would push rates up further and make housing less affordable.
The 30-year fixed mortgage rate is currently at 4.31 percent, up from 3.53 percent a year ago.
Meister pointed to government initiatives such as the Obama administration’s home affordable modification program — which required banks to bring down mortgage rates to make homes more affordable – as being partially responsible for the false sense of stability.
“People couldn’t afford the homes to begin with,” he said. “You’re just prolonging the pain.” [Fox Business] – Hiten Samtani