Given their low starting point, and a concurrent rise in income growth, we are optimistic that the housing market can withstand even our above-consensus forecast for mortgage interest rates to reach 5.6% by the end of 2018. We would be concerned, however, if mortgage rates rose above 7%. Fortunately, the likelihood of a rise of that magnitude over the next few years is low. the market has already reacted to Trump’s win. The 10-year yield has jumped from 1.8% just prior to the election to around 2.5% now. And we expect that yields will move considerably higher this year as the Fed is forced to act more aggressively than most anticipate. We see 10-year Treasury yields reaching 3.5% by the end of this year, and 4.0% by end-2018.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services