Rising Rates Vs. The Housing Market

May 15, 2018
Originally published on May 15, 2018 3:26 pm

Interest rates had been falling for most of the past three decades – but two years ago, they started climbing. The yield on the 10-year Treasury note recently climbed above 3%, up from less 1.5% just a couple of years ago.

Among the reasons that rising rates matter is that they have numerous effects on the housing market. Some of these effects are obvious. As interest rates climb, so will mortgage rates, making houses relatively less affordable. Refinancing also becomes less attractive.

But there are also surprising ways in which interest rates affect – and in one case, don't affect – the housing market. Laurie Goodman of the Urban Institute walks us through them.

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