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Mortgage rates have been creeping back up towards 8%. But one expert says a roaring stock market has been helping to blunt the increase.
"You don't need 6% mortgage rates when the stock market is at an all-time high," Robert Refkin, Compass CEO said on CNBC on Thursday. "You have markets like the Bay Area, like Seattle, where people are paid in their bonuses, and their compensation is in stock — it's at an all time high, they can afford a home."
Mortgage rates have gone back north of 7% in recent months after tumbling from recent peaks of more than 8% in October. They originally declined because of the prospect of imminent monetary easing from the Federal Reserve. But as rate cuts have been delayed, mortgage rates have crawled back up.
At the same time, the S&P 500 has hit a series of record highs, and currently sits above the key psychological threshold of 5,000. Tech stocks in particular have been powering ahead, with companies like Nvidia and Meta posting blowout earnings reports.
Still, there are signs that high rates are, in fact, deterring homebuyers. A Mortgage Bankers Association report from this week showed home loan applications fell 10% from a week earlier.
But Refkin notes that a glut of inventory could help ease affordability pressures after a major supply crunch exacerbated the housing crisis last year.
"What's driving activity is inventory and we have 13% more inventory this year than we did last year, and it converts into sales," he said. "I believe this Spring market we will see a significant increase in inventory."
