Housing Recovery Could Withstand 4% Mortgages: Ex-FHA Head

As we head into the spring home buying and selling season, the housing comeback is showing signs of accelerating more rapidly than most anybody had thought at this point, David Stevens, president and CEO of Mortgage Bankers Association, told CNBC on Friday.

"The peak housing era of 2005 through 2007, those couple years produced some very dangerous characteristics we can't allow to ever come back," the former Obama Federal Housing Administration commissioner said in a "Squawk Box" interview. "But the market is clearly improving [now]" and could weather rising interest rates should the Federal Reserve start tightening at some point.

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Next week, there are three important housing reports on the schedule: The S&P/Case Shiller home price index, new home sales, and pending home sales.

Earlier this week, data showed that home resales hit a three-year high in February. The National Association of Realtors said that existing home sales increased 0.8 percent to an annual rate of 4.98 million units last month. The median sales price in February rose 11.6 percent from a year ago to $173,600.

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Stevens speculated on the impact that rising interest rates could have on the housing recovery. "The purchase market, we think, the market can easily withstand a 4 percent rate, which is what we forecast for year end."

This week, mortgage rates headed lower after rising to their highest levels in nearly seven months. Freddie Mac said that the national average for a 30-year fixed-rate average fell to 3.54 percent.

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"Interest rates below five percent, we would have laughed about this [great] opportunity six or seven years ago," Stevens explained, but he acknowledged that higher rates could slow refinancing a bit.

As for the home mortgage tax deduction—which has been caught up in the Washington budget fight—he said, "We're spending a trillion more than we take in every year. Everything has to be on the table."

"One thing I would suggest is that there are tipping points to everything," he continued, "it has to be something we take in context with the broader picture."