Here's something to chew on.
Average interest rates on U.S. 30-year mortgages inched up this week, after dipping to historic lows, Freddie Mac said on Thursday. Thirty-year mortgage rates averaged 5.24 percent after 5.21 percent last week, the lowest on Freddie Mac records dating back to 1971.Now clearly a week a trend does not make, but the slight turn upwards could have enormous consequences and not for the reasons the Powers-That-Be have in mind. There is little reason to think the increase is due to actual economic recovery. It may be caused by expected recovery and it may be caused by the US federal government sucking every spare dollar in the wind for miles around as debt. Regardless of the causes, any real rise in mortgage rates will choke off the housing boom which relies on ultra-cheap lending rates. Rising defaults and bankruptcies (remember that U.S. mortgages in foreclosure climbed to a record high in the first three months of 2003) can easily follow in its wake, and the house of cards teeters.
Now none of this is a foregone conclusion, but this unusual rise in mortgage rates is definitely something to keep an eye on.