Pricing on mortgages has broken down through a level of support that’s held for the last six months (the green line), pushing 30 year conventional loans up to 4.0%. Here are a couple reasons why:

Factory Orders are up 2.2%
FHFA Housing Price index rose 6.6% YOY
New Home Sales are up 18.9% YOY, with a median price of $319,700
The 10 Year Treasury broke above 2.4%.

The 10 Year Treasury looks like it could push up above 2.6% in the next few weeks, which has the ability to drag mortgage rates up with it.  I don’t see them in lock step, but up is up.  Tell your clients to get off that fence.

I talk to A LOT of people who are expecting homes to drop in value.  I don’t see it, personally.  But let’s say that next spring, prices are down 5%, and over the same time, interest rates have risen 0.5%. An interest rate hike from 3.75% to 4.25% would more than offset the payment of a home with a $15,000 price reduction (on that median priced home), and the buyer will pay more over the life of the loan as a consequence.  If you want me to put some numbers together for you so that you can show your clients, I’m happy to do that for you!