Rising mortgage rates could threaten housing demand in 2017

screen-shot-2016-12-11-at-10-31-13-amSustained increases could lead to ‘rate lock,’ leaving some homeowners reluctant to trade up or down

By Laura Kusisto | The Wall Street Journal

Rising interest rates pose a dilemma for people who love their mortgage more than they hate their house.

A sustained period of rising rates could freeze homeowners with rock-bottom mortgages who otherwise might want to trade up for bigger or better properties.

Such situations, which economists call “rate lock,” could weigh on housing demand in 2017, economists said.

A seven-year run of historically low mortgage rates has encouraged home buying, helping increase prices sharply after the housing crash. The S&P CoreLogic Case-Shiller U.S. National Home Price Index reached a record in September.

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