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Rate Spike Dangers Economy?

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Elite Member
Jan 16, 2002
Professional Status
Certified General Appraiser
This article appeared in the news this morning. Basically what it says is that one of the most significant economic stimuli, creating equity in your home by using it as an investment because it appreciates in value, and mortgaging the future of your kids by refinancing at lower rates to create disposal income, has come to an end. Is this responsible economic policy and leadership?

ANALYSIS: Interest rate spike endangers economy


By RON SCHERER, Christian Science Monitor

Within the past few weeks, long-term interest rates have spiked by almost a full percentage point, probably ending one of the nation's greatest mortgage-refinancing booms in history. The higher rates - almost back to where they were a year ago - mean that many people will no longer be able to afford to borrow as much money. This may eventually affect housing prices, which have been just about the best performing investments in the American portfolio.
If the housing market fades, analysts expect it could ripple widely through the fragile U.S. economy. Americans have been using refinancing to pay for their kids' college tuition, lower the debt on their credit cards, and take the family to Disneyland. In essence, savings on the mortgage had become one way millions of Americans could afford their lifestyle.
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