It sounds like a silly question at first blush: Of course, economic growth is our friend. And for the most part, it is.

Economic growth leads to job growth, which, in turn, leads to lower unemployment and higher wages. More people working and earning more money is obviously good for sustaining the housing recovery. We will see higher participation, thus the higher likelihood of sustaining the recovery. (At this point, should we still be calling it a recovery, or simply the housing market?) In other words, housing will resume its rightful mantel as a chief economic driver.

But economic growth won't be all sunshine and lollipops.

With higher economic growth comes higher interest rates on rising consumer and commercial loan demand, and rising investor demand for more yield. Moreover, sustained economic and job growth will embolden the Federal Reserve to withdraw from the mortgage-backed securities market. Without the Fed's current enormous appetite for these securities, mortgage rates will surely rise.

So, yes, economic growth is good, but it won't be so good for potential borrowers who have been lulled into inertia by the false belief that today's interest rates are a permanent fixture of today's lending markets.

   Courtesy of Jessica Regan.

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