..before realtors get too confident about the future, it is worth looking at some sobering research from the International Monetary Fund, buried deep inside this autumn\u2019s Global Financial Stability Report. This analysis, which looks at mortgage real estate investment trusts (M-Reits) \u201d\u201c which invest in packages of mortgage bonds \u201d\u201c did not make headlines when the IMF met last month, because M-Reits are a fairly specialist sector. That is a pity, given that the IMF says the rapidly expanding world of M-Reits has the potential to deliver nasty surprises if, or when, US interest rates rise.<\/p>\n
Most notably, even a modest increase in rates could spark fire sales of mortgage-backed bonds, which would raise mortgage interest rates sharply for consumers. And that could not just hurt housing markets but produce knock-on waves of instability in other areas of finance.<\/p>\n
\u201cRapid M-Reit deleveraging has important spillover implications,\u201d\u009d the IMF report warns.<\/p>\n