By Walter Kurtz, Sober Look, via Pragmatic Capitalism, 6/12/2013.
As mortgage rates in the US reach the highs not seen since early 2012, many are asking the key question: would this rise in rates impact the housing market or consumer sentiment?
So far the only effect we are seeing is a decline in refinance activity – which has always been volatile. The Purchase Index however continues to show elevated mortgage activity that results from house purchases.
As mortgage rates in the US reach the highs not seen since early 2012, many are asking the key question: would this rise in rates impact the housing market or consumer sentiment?
So far the only effect we are seeing is a decline in refinance activity – which has always been volatile. The Purchase Index however continues to show elevated mortgage activity that results from house purchases.
Source: Mortgage News Daily
The markets are also not anticipating the mortgage rate increases to have a major impact on the housing sector. Homebuilder shares, having taken a bit of a beating in recent days, are still massively outperforming the broader indices.
Source: Ycharts
Some analysts are warning however that if the 30-year mortgage rate rises above 4.5%, all bets are off and the housing market will begin to feel the effects.
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