Tighter money spells lower house prices

Interest rates for US fixed home loans have just risen for the second week in a row. That should be getting housing bulls worried.

Interest rates for US 30-year fixed home loans have just risen for the second week in a row. The average rate is now 5%, against 4.92% last week. That may not sound like much of an increase, but the reason behind the rise should have housing bulls everywhere worried.

Last year, the Federal Reserve set out to cut mortgage rates to help struggling US homeowners. It did this by slashing interest rates, printing money and also pledging to buy US bonds backed by home loans. The size of this last part of the stimulus was increased to $1.25 trillion just this March.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.