Refinances & Purchases Drop
Mortgage rates keep rising at a very brisk pace. May 2022 saw mortgage interest rates rise up 2.375% higher than they were in December of 2021. Refinances were down over 75% month over year in May and purchase volume was also down 15% month over year in May.
While rising mortgage rates should start to have an impact on housing prices, we are still seeing a severe lack of inventory which is continuing to push home prices up. This year may not see another 20%+ appreciation in home values as we experienced in 2020 and 2021 but we are likely to still see single digit appreciation figures due to the historically low inventory levels.
Inflation Driving Rates
Inflation continues to be the main driving force in rising mortgage rates. During less volatile times in the markets, the interplay between investor dollars flowing from stocks to bonds or bonds to stocks moves mortgage interest rates down and up. Usually when investors sell off in the stock market those investment dollars will flow into the safe haven of the bond market, which will cause more demand than supply for treasury bonds. The more demand there is for treasury bonds causes mortgage rates to fall. In the current environment, we are not seeing investor dollars flow into the bond market, despite the steep sell offs in the stock mark