We've discussed this before, but it's worth discussing again: Rising interest rates won't derail the recovery (both economic and housing). We appear to be in the minority opinion, though; many of our colleagues think otherwise.

Our thesis goes like this: Rising rates will be accompanied by economic and job growth, which means more people will be able to afford a home, along with the cost of higher lending rates.

At this point, more people working trumps historically low interest rates. Moreover, rising rates accompanied with economic growth will spur people to action: If they believe rates are more likely to rise than fall, they will tend to act now instead of procrastinating.

It's also worth noting that we are still in an unnatural lending environment. The Federal Reserve's manipulation of mortgage rates is an anomaly that can't go indefinitely. (The market can take only so much liquidity before serious dislocations occur.) We think the return to normalcy – a lending market based on natural lending rates, economic growth, and job growth – offers many more positives than negatives.

We've had higher mortgage lending rates in the past and have prospered. If higher rates are accompanied with a strong economy, we see no reason why we wouldn't prosper again.

Courtesy of Jessica Regan.

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