- Compass CEO Robert Refkin said a strong U.S. stock market means homebuyers are more tolerant of high mortgage rates.
- Mortgage rates are rising again toward 8% as inflation measures rise and the Fed slows to cut rates.
- But “you don’t need a 6% mortgage rate when the stock market is at an all-time high,” Levkin said.
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Mortgage interest rates are gradually rising towards 8%. However, one expert points out that the soaring stock market is slowing down the rate of increase.
“We don’t need 6% mortgage rates when the stock market is at an all-time high,” Compass CEO Robert Refkin told CNBC on Thursday. “You have markets like the Bay Area, like Seattle, where people are paid bonuses and their compensation is stockpiled. It’s at an all-time high and they can afford to buy housing.”
Mortgage rates have returned to above 7% in recent months, after falling from a recent peak of over 8% in October. It initially declined on expectations that monetary easing by the Federal Reserve was imminent. However, because the rate cut was delayed, mortgage rates rose again.
At the same time, the S&P 500 index has hit a series of new highs and is now above the key psychological threshold of 5,000. Tech stocks have been particularly strong, with companies such as Nvidia and Meta reporting explosive earnings reports.
Still, there are signs that high interest rates are actually discouraging homebuyers. According to this week’s Mortgage Bankers Association report: Mortgage applications fall by 10% From a week ago.
But Levkin points out that excess inventory after a major operation could help ease affordability pressures. Lack of supply worsened last year’s housing crisis.
“It’s inventory that’s driving activity, and this year’s inventory is 13% higher than last year, which translates into sales,” he said. “We believe we will see a significant increase in inventory in the market this spring.”