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Rising rates will cool, not crash, the housing market

We now expect mortgage interest rates will rise to 4.0% by the end of the year, and to 4.25% by end-2022. But housing demand will be supported by a reopening economy, the large fiscal stimulus, frustrated buyers still looking for homes and substantial savings built up during the lockdowns. Banks are also likely to ease lending standards, offsetting some of the hit to purchasing power. The jump in rates will therefore just help cool, rather than crash, the housing market.

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