Rising interest rates - how high would be too high?

Given their low starting point, and a concurrent rise in income growth, we are optimistic that the housing market can withstand even our above-consensus forecast for mortgage interest rates to reach 5.6% by the end of 2018. We would be concerned, however, if mortgage rates rose above 7%. Fortunately, the likelihood of a rise of that magnitude over the next few years is low. the market has already reacted to Trump’s win. The 10-year yield has jumped from 1.8% just prior to the election to around 2.5% now. And we expect that yields will move considerably higher this year as the Fed is forced to act more aggressively than most anticipate. We see 10-year Treasury yields reaching 3.5% by the end of this year, and 4.0% by end-2018.