Recently the stock market has been surging and it looks like the DOW will cross 12,000 sometime this week.
Things are looking up for investors, the nightly news is excited to report about any tangible turn-around in our economy, and the "recovering" stock market is a great talking point for dinner parties.
Unfortunately, the stock market and mortgage rates tend you move in the same direction. As the stock market picks up steam and money flows out of the bond market, long term interest rats tend to move upward.
It's worth discussing as to whether or not an increase in mortgage rates may do more harm to the overall economy. Everyone likes to turn on the news and see that the economy is doing "well", but what does this recent surge in the DOW mean to the average tax-payer?
Lower to middle class Americans tend to have a much greater portion of their net worth tied up in their home. To your average American, monthly cash-flow is much more important than dividend pay-outs or investment returns.
With the depressed housing market and adjustable-rate mortgage payments being a financial burden for so many Americans, could increases to mortgage rates end up keeping us in this recission longer than expected?