Despite the link between the two, the Federal Reserve’s interest rate hike isn’t the cause of the recent decrease in mortgage applications.
Housing Wire broke down a report from Capital Economics and said that the original December forecast said that the housing market could survive rising rates. The late December holidays skewed some of the results a bit.
“It is tempting to ascribe that collapse to the decision by the Fed to increase interest rates for the first time in nine years at their December meeting. After all, there is a tight relationship between mortgage interest rates and refinance activity,” Matthew Pointon, property economist with Capital Economics, said in the article.