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More good news from the housing market

Applications for new mortgages rose again last week, and are up almost 30% from the July lows, in a good sign that the housing market is unlikely to suffer another relapse and may even be putting in a bottom.

Meanwhile, mortgage rates have jumped from their lows, and are going to be rising further, since the yield on Fannie and Freddie MBS has shot up 100 bps from the early October lows. Will this kill the housing market? I doubt it. Rates are still very low from an historical perspective. If anything, the recent rise in rates is likely to stimulate mortgage demand: "get it before the price goes higher." Plus, rising rates in general are symptomatic of improving economic fundamentals.

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