Are Banks and Housing About to Get Crushed by Rising Rates?
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The evidence is everywhere: mortgage rates are at a two-year high, applications have fallen for four straight weeks after climbing for more than a year, and Fed Chairman Ben Bernanke says he would have to "push back" if the impact of rising interest rates were jeopardizing the recovery.
As my co-host Jeff Macke and I discusss in the attached video, the question is whether this short-term repulsion is the start of something bigger or simply an understandable reaction to a volatile market.
For those hoping for answers from the bank earnings out this morning, it appears that the jury is still out on that front too. Take JP Morgan's (JPM) second-quarter mortgage originations, for example, which fell 7% from the first quarter, yet were still up 12% from a year ago.
As Macke says, even the lenders themselves are at the mercy of the market and loathe to guess what the impact will be on housing demand and ultimately, the broader economy.
"In May, the banks had no idea where rates were going, and so they're going to tell us now where they think they're going to go in August," he says, before labeling the highly complex and qualified earnings reports from banks a ''best guess."
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