Mortgage Rates: The Housing Market Is More Fragile Than Expected

By Douglas A. McIntyre Updated Apr 28, 2:10AM EDT · Published Jun 10, 11:23AM EDT

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house Mortgage rates are near multi-year lows, so it would seem that if buyers were going to be lured back into the housing market, now would be the time.

But, even the most modest increase in the rate that buyers have to pay for home loans appears to be crushing demand. The Mortgage Bankers Association said that the average 30-year fixed mortgage rate jumped .32% point in the June 5 week to 5.57 %. Loan applications fell back to a rate not seen since November.

The brief improvement in home financing was just that–brief. Unemployment may have been 9.4% at the end of last month, but June may be worse than May when joblessness moved up 345,000. Layoffs across the auto industry have started again which may contribute to a significant increase month-over-month.

Home Depot’s (HD) upward revision in earnings expectations is another sign that people may be staying in the homes they have and making very modest investments to improve them.

Most recent data indicate that, even if home buying may be up modestly in some of the hardest hit regions where home prices are down more than 50% since 2005, the average value of houses is not improving. The huge pool of foreclosures which is growing by the day, will see to that.

The up-tick in mortgage rates last week was tiny, but it blew demand out of a fragile market.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.