"They're having trouble lending out the deposits they have," he said.The rate on the 10-year note, for example, is still historically low and may not outpace inflation over the next decade. A 10-year Treasury yielding 2.4 percent "is still a bad deal," McBride said. â¿¿ BOND INVESTORS. Ordinary investors who have soured on stocks have poured about $1 trillion into bond funds since the Great Recession began in December 2007. A common assumption is that bonds aren't very risky. These investors might be having second thoughts. That's because as rates rise, bond investors can lose principal as the value of their existing bonds declines. Investors in bond funds, especially those with longer-term holdings, are most at risk. The Pimco Total Return fund, the world's largest mutual fund with $285 billion in assets, has lost 3.3 percent in the past month. Marilyn Cohen, president of Envision Capital, fears that baby boomers will pull out of bond funds as fast as they rushed into them. If so, that could send bond yields rising further in a cycle of selling spurring more selling. "The group that stampeded out of stocks into bond funds is going to have a challenging year," she said. â¿¿ HOMEBUILDERS. Higher mortgage rates could lower demand for new homes. That would squeeze builders. The stocks of leading builders like Toll Brothers, Lennar and D.R. Horton all plunged Thursday far more than the stock market as a whole. But many builders say they remain optimistic. They say higher rates will encourage potential buyers to get into the market before rates rise further. "We're trying to encourage buyers to get off the fence, so we think it will actually help sales," said Holly Haener, director of sales and marketing at CBH Homes in Meridian, Ohio. Eventually, if mortgage rates keep increasing, some buyers would no longer be able to afford a home, Haener acknowledges. They might have to buy a smaller house or forgo some home amenities to offset the cost of a higher mortgage rate.