You might have heard about the big sell off in MBS yesterday. This has the effect of raising rates. To find out more what MBS and the Bond market is doing on any particular day I recommend the following blogs:
http://www.mortgagenewsdaily.com/mortgage_rates/blog/
http://acrossthecurve.com
If rates stay this "high" (hard to say 5.25%+ rates are high.. but that is the world we live in currently) it will hurt the marginal buyers, loan modifications and refinance. Right now it appears to be a temporary phenomenon, if it remains sustained over a period of weeks or months we will see the effects on the market through higher fallout of pending deals, fewer new deals going pending and inventory building up as a result. The Fed still has over $700 billion in MBS purchases to make in an attempt to keep mortgage rates low and that is a lot of firepower sitting on the sidelines.
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