Survey: Rates Up, Housing Strong in June '04

A survey of bond market economists shows that they expect accelerating economic growth to push 30-year mortgage rates up to 6.0% by next June, while home sales remain at record levels."Any adverse effect of a rising mortgage rate environment is likely to be counterbalanced by rising income and employment," according to the survey by The Bond Market Association. TBMA senior vice president Michael Decker said the survey did not ask the economists about the recent management shake-up and accounting problems at Freddie Mac. However, he inferred from the results that they do not expect "any significant, systemic disruptions in the U.S. mortgage markets." TBMA president Micah Green pointed out that the global markets for Fannie Mae and Freddie Mac securities have remained strong. However, a long and protracted fight over reform legislation could be unsettling. "Whatever is or is not going to happen, we would just urge that policy-makers be sensitive to market effects and the uncertainty that prolonged activity in a politically charged environment can generate," Mr. Green said.