Economists Debate Potential for 9% Mortgage Rates
Economists analyze a worst-case scenario where mortgage rates could reach 9% driven by oil prices, economic growth, and Federal Reserve policy.
Economists are debating whether mortgage rates could climb to 9% over the next 12 months. Selma Hepp, chief economist at Cotality, outlined a worst-case scenario on CNBC detailing the specific conditions required for such a spike.
Analysis indicates that rates would need to hit 9% through a combination of nominal economic growth between 5% and 7%, sustained high oil prices fueled by a continuing conflict involving Iran, and a hawkish Federal Reserve hiking rates beyond current market expectations. This trajectory would also require the 10-year yield to rise above 6% and mortgage spreads to widen.
Some analysts argue these conditions are unlikely to occur simultaneously. They suggest that political pressure on President Donald Trump following the midterms could influence the duration of the Iran conflict, potentially stabilizing oil prices and preventing the worst-case rate scenario.
