By Sober Look
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.