U.S. home prices have been rising at a record annual pace in recent months, fueled in part by historically cheap credit, the absence of properties for sale, and the scramble by households for more space as families have fled to the suburbs during the pandemic.
Can the good times last when the Federal Reserve finally cuts back on buying mortgage and Treasury bonds? Here’s how mortgage rates and a less gargantuan central bank footprint could impact the heated U.S. housing market.
“The Fed is certainly talking and thinking about it,” said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, on the subject of how the Federal Reserve could scale back the central bank’s $120 billion a month bond-buying program.
But Jones also thinks tighter credit conditions, likely via higher borrowing rates as the Fed tapers its bond buying program, might end up being a saving grace for today’s housing…