Rising Rates Starting To Affect Housing Market

Washington, DC, Dec. 9, 2010 -- Rising interest rates, due in part to the recent tax deal, are beginning to shut some people out of the housing market.

Yields in the U.S. Treasury bond market spiked on Wednesday as investors worried the deal would inflate further the ballooning U.S. deficit, pushing mortgage rates upward.

The average 30-year fixed mortgage rate has climbed nearly a half-percentage point since early October to 4.66 percent last week, according to the Mortgage Bankers Association said on Wednesday.

The rate increase has closed the door on $1 trillion in loans, mostly refinancing loans and another quarter point would add another $600 billion to that number, Scott Buchta, head of investment strategy at Braver Stern Securities in Chicago, told Reuters.

"Should rates rise higher from here, you'll start to have an impact on a purchase market that is just starting to recover," Buchta told Reuters.