Should’ve bought last month!

There’s a misconception out there among a lot of would-be American homebuyers and, unfortunately, a lot of industry professionals too, that mortgage rates are destined to fall further given that the Fed’s destined to deliver a series of additional rate cuts. “We’re in a falling-rates environment.” That’s the phrase you’ll hear.

I said this last week, and I’ll say it again: If I had to guess, I’d say mortgage rates will be lower this time next year than where they are today, but in the near-term, it was always likely that rates would retrace higher following a multi-month decline, given that the bond market was pre-trading the Fed and also considering that a quarter-point of an uninterrupted 12-week drop in home financing costs from early July through late September was courtesy of the early-August growth panic which turned out to be a false alarm.

In any event, recent data suggests the US economy’s holding up fine, and the Fed’s starting to hedge a bit on the rate-cut timeline and trajectory. 10-year US yields — which is what you should be watching if you want to know where mortgage rates are going — are 40bps off the lows, and now trade with a four-handle.

With that in mind, the MBA’s index tacked on another 16bps over the last week. It was the third increase in a row. Rates are up 38bps in just two weeks.

As the simple figure shows, rates are now at the highest levels since mid-August, just after the above-mentioned growth scare catalyzed a big bond rally.

Needless to say, that impacted mortgage activity. “The recent uptick has put a damper on applications,” MBA VP Joel Kan remarked on Wednesday. The refi gauge plunged 26%, pushing refis’ share of overall activity below 50% for the first time in weeks.

As for purchases, the MBA’s gauge dropped 7%. Kan was keen to note that purchase applications, as measured by the index shown below, are still higher than where they were a year ago, when rates were blazing a path to an eight-handle.

“Demand is holding up to an extent for prospective first-time buyers,” Kan went on. “Some” buyers, he said, “remain in the market because of improving housing inventory conditions.”

It’s worth noting that an MBA index which measures mortgage credit availability tightened last month. In a separate release, Kan cited lender caution “in [an] uncertain economic environment.”

Meanwhile, a Redfin survey suggested that almost a quarter of buyers are putting off a decision until after the election. 26% indicated they’re hoping Kamala Harris’s downpayment assistance plan gets passed, and 16% said they’re “waiting to see if [Donald] Trump’s housing affordability plan is enacted.”

I didn’t even know Trump had a plan. Or a “concept of a plan,” as he put it, while explaining his approach to healthcare reform.

This is most assuredly not home-buying advice, but: If you’re struggling to make the math work on a home purchase, I’m not sure I’d depend on Harris or Trump to help you. Better, probably, to just talk to a mortgage loan officer, your spouse and your financial planner.

I’m the very last person to adapt and paraphrase worn-out Reaganisms, but waiting around on the government to save you from a dire situation isn’t a plan. It’s not even “a concept of a plan.”