MATT RIVERAS , area vice president with Wells Fargo Home Mortgage in Santa Rosa, discusses recent warnings from federal banking regulators about the condition of the U.S. residential real estate market.
PRESS DEMOCRAT: Federal bank regulators are warning banks and other mortgage lenders that the end of the five-year housing boom could cause problems, both for lenders and for consumers. What do regulators fear might happen if the housing boom ends?
RIVERAS: When long-term rates rise, it can have a negative effect on home prices. If, for some reason, interest rates are going up at the same time that family income levels are dropping or there is high unemployment or inflation, this can create an uptick in delinquency rates or foreclosures.
However, the labor market is strong nationally and interest rates are still quite low by historical standards. In addition, housing price gains in 2006 are expected to continue to be healthy, but at a more sustainable pace.
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