The 30-year fixed hit 5.31 percent last week, the highest level since the first week of last August, according to the Mortgage Bankers Association.
In response, mortgage applications fell 11 percent, driven entirely by a nearly 17 percent drop in refis.
Purchase applications were basically flat, up just 0.2 percent (all seasonally adjusted).
We called it right?? Rates rise when the Fed stops buying Fannie and Freddie MBS March 31st.
"Believe it or not, it had little or nothing to do with the end of the Fed MBS program," says Bankrate.com's Greg McBride. "Upbeat economic news — a return of job growth, continued improvement in both the manufacturing and service sectors — pushed bond yields higher, taking mortgage rates along for the ride."
Remember, mortgage rates respond to bond returns, and as the economy improves and the stock market improves, bonds have to pay higher returns to hold onto investors.
This is not to say that the end of the Fed's MBS program won't impact mortgage rates eventually. We have to watch the spread between mortgage rates and yields on Treasuries.
So all this good economic news is perhaps bad news for housing?
Not so fast.