Deflation Shows Up In Mortgages

From Bloomberg:

The Mortgage Bankers Association's purchase index fell 2.3 percent in the March 12 week. Despite the fall, two prior weeks of strong gains still hint at month-to-month strength for home sales. The refinance index also fell, down 1.7 percent. The declines weren't due to high mortgage rates which fell sharply in the week with 30-year loans down 10 basis points to an average 4.91 percent. The MBA has been warning that low rates are no longer boosting refinancing demand.

Comments:

What happens when rates are forced to move up substantially when bond investors demand more yield?

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