The rebound in 30-year mortgage rates from a record low of 4.2% to
just under 5% has put a small dent in the already fragile outlook for the housing
market. (See Chart below.) Admittedly, mortgage rates remain exceptionally low
by historical standards and affordability is still very high. Furthermore, towards
the end of last year home sales rose, supply fell and price trends were not as bad.
Nonetheless, higher mortgage rates threaten to extinguish the recent tentative
upward trend in both mortgage applications and home sales.
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