My guess is that they can and will, but the NYT doesn't seem to agree. In a bit over a month, the 10-year treasury rate has gone from around 4.6 percent to more than 5.25 percent. This rise will be passed on almost one to one in higher mortgage rates. With many people already stretching to the limits to buy homes at their current bubble inflated prices, my guess is that this rise in rates, if it sticks, will be a huge hit on an already weak housing market. The NYT did not mention the potential impact on the housing market in this discussion of the surge in interest rates.
--Dean Baker
