Falling rates are good news for US housing

…at least in the short term.

Zillow reports that US 30-year fixed mortgage rates fell to 3.58% from 3.72%. With Treasury yields down another 8 basis points today, you can bet on that trend continuing. Rates fell as low as 3.30% in 2012, the last time 30-year bond yields were this low.

The problem is that if house prices are going to keep on rising, eventually incomes will need to rise too or another bubble will burst. But for urban centres, as long as awful standards of lending to sub-prime borrows doesn’t become the norm, I think US house prices can rise a long way from here.