A week ago we warned “this won’t end well” as mortgage rates started to spike, and this week’s mortgage application data suggests it is…
The average 30Y mortgage rate rose 7bps this week to 4.57% – the highest level since January 2014.
And applications are tumbling…
Will higher rates break housing market momentum?
It appears to be impacting the mortgage application pipeline as purchase applications plunged 5.9% MoM – the biggest drop since October and September (impacted by storms).
As the following chart shows, that surge in rates will have a direct impact on home sales (or prices will be forced to adjust lower) as affordability collapses…
via Zero Hedge http://ift.tt/2o6uvq7 Tyler Durden