Fitch on U.S. Housing and Interest Rates: 'How fast and how high?'
By and large Fitch expects the impact of a rising rate environment to be muted across most housing sectors so long as the rate increases are gradual and driven by a strong economy. Conversely, steady, sharp advances in rates could have an opposite and more adverse effect. Interestingly, the lone anomaly in both scenarios is U.S. homebuilders.
While a rising rate environment could prove problematic to homebuilders, sudden meaningful increases in rates could actually serve as a positive and spur home sales at least in the short term. That said, the ripple effect of rising rates on homebuilders would not be fully felt until 2016. If realized, this trend would emulate the housing environment of the mid-1990s, when rates shot up from 7.1% to 9.2% in the space of a year (1994).
Analysts from Fitch's CMBS, RMBS, REITs and homebuilding groups detail the prospects of a rising rate environment on the aforementioned sectors in a series of videos published today. They are available in the 'Multimedia' page at 'www.fitchratings.com'.
This series comes on the heels of Fitch's 'Global Housing and Mortgage Outlook'. Released last week, the outlook report is available at 'www.fitchratings.com' or by clicking on the link at the end of the press release.
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