Sharp increases in long-term interest rates, triggered by Chairman Bernanke statements, threaten sales of homes, cars and other big-ticket items that have helped drive the U.S. economic recovery.
The U.S. economy grew at a 1.8% annualized rate in the first quarter this year after barely growing in the fourth quarter of 2012, . An important part of the growth was produced by spending on big-ticket consumer goods and home construction, both sensitive to interest rates. Taking away those two sectors, the economy grew at an anemic 0.9% in the first quarter and contracted in the final three months of 2012.
Higher rates reduce the appeal of mortgage refinancing, which helps households lower monthly payments. The Mortgage Bankers Association said Wednesday that applications to refinance mortgages decreased last week to their lowest level since November 2011.
