Rates went up. Demand went down. This apparently qualifies as financial news worth reporting.
Mortgage rates hit their highest level in over a year. People who were thinking about buying houses decided not to buy houses. Total mortgage demand dropped below where it was last year at this time. Economists are calling this "a development in the housing market" because economists get paid to name things that already happened.
Somewhere right now a retail trader is reading this headline and thinking he's unlocked alpha. He's going to short homebuilders or go long on rental REITs or do whatever the f*ck people do when they confuse a news article with a trading signal. He'll tell his friends he's playing the housing cycle. His friends will nod. Nobody will check back in six months when he's down 40% because the Fed cut rates twice and mortgage demand came screaming back for reasons that also won't matter.
The most predictable relationship in finance is price and demand. Raise the price of something and fewer people buy it. This is the kind of insight you'd expect from a seventh grader who just learned what supply and demand means. But we're treating it like breaking news because it has the word "mortgage" in it and mortgages sound serious.
Here's what actually happened: rates went up because bond yields went up because the Fed hasn't cut rates as fast as everyone wanted. Demand fell because monthly payments got higher. None of this tells you what happens next. None of this tells you when to buy or sell anything. It's just a description of a thing that occurred, packaged as actionable information for people who don't know the difference.
The chart guys are already drawing lines through this headline.
Photo by Precondo CA on Unsplash
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