The benchmark 30-year mortgage rate has risen from 3.6% two months ago to 4.7% last week. The effect on remortgaging volumes has been considerable – applications for remortgaging have halved in the space of two months. But applications for home purchase are the better indicator of underlying housing demand, and they have held up much better. Applications managed to edge up by 0.1% m/m during June and have risen by 11.7% over the past year. Meanwhile, home sales rose by 4% m/m in May and the pending home sales index points to another increase in June. With price gains still going strong, there are few signs that the rise in rates will derail the housing recovery.
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