Source: Forbes —
The fast 4% mortgage rate climb to 7% has sparked worries about the housing market. However, the residential real estate market produces its own cycles, even running counter to the stock and bond markets. That independence comes from a focus on supply and demand for homes, new and existing.
Then there are the real estate lenders. They are key because most purchases are highly leveraged by long-term debt. The health and price strength of housing (the collateral) and the credit quality of the borrowers (along with current employment factors) are important factors in lenders’ willingness to provide mortgages.
The mortgage rate is where Wall Street comes in. With lenders selling off most mortgages, the current interest rates and investor demand determine the rate offered.
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