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Wednesday, June 12, 2013

Not Good For Housing

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?

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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.

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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.
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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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