After rising by 19 basis points during November, current mortgage rates are nearly a full percentage point higher than they were in early May. The question is: Have higher mortgage rates begun to take their toll on the housing and refinance markets?
Indications are that despite some outward signs of strain, those markets are still quite healthy.
Housing prices march onward and upward
On November 26, the latest S&P/Case-Shiller Home Price Indices revealed that home prices rose by 3.2 percent during the third quarter, and by 0.7 percent during September. On the surface, these figures seemed to represent a slowing down from the 7.1 percent growth rate for the second quarter, and the 1.3 percent growth rate for August.
However, the real estate market is notoriously seasonal, and when seasonally adjusted figures are compared, it turns out that the second- and third-quarter growth rates are virtually identical, as are the August and September rates.The third quarter figure is especially telling, since this year's rise in mortgage rates essentially occurred in May and June. This means that significantly higher rates prevailed throughout the third quarter, but the housing market continued its recovery anyway.