Is it only the blogs that noticed a huge spike in interest rates over the last couple of weeks?

Stuck inside these four walls, sent inside forever,

Band on the Run — Paul McCartney and Wing

One of the advantages of reading topic-specific blogs like the IHB is that you find out about things before they reach general public awareness. For instance, last week, there was a sudden and dramatic rise in interest rates. Mr. Mortgage has written extensively about this and its ramifications in posts: 5-28 – Potential Consequences of 5.5% Mortgage Rates, 5-29 – ‘The Day After’ the Interest Rate Spike , 6-5 Beware Real Estate False Bottoms (Link to 69 page PDF file.) Some other bloggers have been on the case including Calculated Risk: Rising Rates: The Next Fed Meeting Will be Interesting. For the most part, the mainstream media has not been covering this story and its important ramifications.

I had the following email exchange with a mortgage broker:

Question: With our limited inventory, many affordable properties are seeing numerous

bids, sometimes over the ask. Do you think this phenomenon will stop due to the

higher rates?

Answer: This rate Tsunami hasn’t even made the news yet. When I mean news, I mean buyers don’t realize that their Pre-Qual letters are now worthless and payment expectations are shattered. Realtors also have no idea what will happen when 45% of all sales suddenly stop – meaning 1st timers will start holding back buying distressed homes. These buyers are very rate sensitive and will sit idly by waiting for rates to improve. Since rates won’t be back in the sub 4.5% range (7.0 point cost today to get a 4.5% rate!) only price reductions will make the sales perk back up. This is a 30 day problem. In other words, the fit has hit the shan and 30 days from now is when everyone will finally get a whiff of the trouble this means.

In our forums, this same broker had this to say: