Housing Boom Ignores Rising Interest Rates

The Arizona Republic reports that the real estate market continues to boom despite the prime lending rate climbing to nearly a four year high. However, home mortgage rates have remained a relative bargain- meaning home buyers can qualify for larger loans, a major factor why real estate prices have continued to rise nationwide. But many of the adjustable rate mortgages are tied to short-term interest rates, and the average rate on a home equity loan is expected to reach 7.04% by the end of this month, up from 4.68% in June 2004. Many economist are still worrying about a real estate price bubble and its effect on the nations economy should housing prices decline. More...