For the 16th of the last 18 weeks, mortgage refinance activity plunged (dropping 20% this week alone). Since early May, when the dreaded word "Taper" was first uttered, refis have collapsed over 70%. With mortgage servicers and providers large and small laying people off, it seems hard for even the most egregiously biased bull to still suggest that the housing recovery is sustainable. Once again, for those that forget - and as we explained in great detail here [3], it is not about 'absolute' levels of rates; it is all about relative levels as prices of homes adjust to the new 'affordability' of monthly payments as rates drop - any rise in rates (with a stagnant income growth) means home prices (and ex-cash-buyer demand - which looks set to 'controlled' [4]) collapses. This is the lowest level of mortgage refinance activity since since June 2009 and lowest total mortgage activity since Oct 2008 - in the middle of the financial crisis.
Who says the Fed didn't drive all this?
[5]
of course - it's charts like this that are 'used' to show that the fall in activity and rise in rates is not impacting sales...
But - once one uses a brain cell or two - the realization is that action is lagged; these are not fast transactions and behavior takes time to shift... the future does not look so bright...
Unless teh Fed backs off the Taper entirely - admits we are absolutely screwed and doubles down.