Rising interest rates hint of further drop for home prices

Rise in Yields Pushes Up Rates
A sudden and unexpectedly quick bounce in Treasury yields has jolted the financial markets — including mortgage rates, which have risen rapidly in response.

Freddie Mac puts 30-year home loan interest at an average of 4.83 percent for the week ended Dec. 16, up from a record bottom of 4.17 percent a month ago.

Although the rate is still favorable by historical norms, any jump in borrowing costs is certain to pinch housing demand, prevent refinancing, and motivate sellers to reduce asking prices.

Source: The Wall Street Journal, Nick Timiraos and Mark Gongloff (12/17/10)

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