How do mortgage rates and the housing market in general affect the stock market

Posted on: June 21st, 2022
By: Tadeo Martinez

Looking at what economic factors to look at, I’m confused because I don’t know what to look for in each of them.

Current mortgage and refinance rates

For the housing market, I found this mortgage rate article showing the current mortgage and refinance rates but what do I take from it? Are those high? Are they low? What is an average mortgage rate?

According to, What is a good mortgage rate in today’s market? what’s considered a low percentage for someone can be considered high for someone else and vice-versa. So how do I use the mortgage rate as one of the factors of where the market is heading?

Then I see that inside the mortgage rates, there are different rates:

  • 30-year fixed-rate
  • 20-year fixed-rate
  • 15-year fixed-rate
  • 10-year fixed-rate
  • 7-year ARM
  • 5-year ARM
  • 3-year ARM
  • 30-year fixed-rate FHA
  • 30-year fixed-rate VA

Do I need to know all of those, or is one of them enough to get a good idea? Should I spend time learning about each of them?

It seems like the 30-year fixed rate is the main one to look at since it’s the longest time so it gives a good overall average.

Historical and current rate trends

According to, Mortgage rates chart: Historical and current rate trends the rate has been going down for years past with the rates being as high as 16.63% in 1981.

So the average of high 5% according to NerdWallet doesn’t seem high at all.

But then the question is, what does an average 5% mean for the market? Is a low mortgage rate a good or bad thing?

According to, How Low Mortgage Rates Can Be Bad For Homebuyers low mortgage rates aren’t such a good thing because they cause a lot of competition which in turn brings up the price of houses. You get a lower rate but end up paying a higher price. Does it balance out a higher price for a lower mortgage rate? Or is it better when it’s a low price with a higher mortgage rate?

The main point of the article above is to never buy a house just because of the hype of low mortgage rates. Only buy a house when you’re ready. But that’s more real estate advice. Let’s focus on the stock market. Let’s find another article that focuses more on the housing market in relation to the market.

The main question I have is:

Is a low mortgage rate good for the stock market?

You can keep track of the U.S. 10 Year Treasury and see what the treasury rate. It’s a general rule of thumb that the treasury rate dictates the mortgage rate.

The treasury rate is also dictated by the rate hikes. When there is a rate hike, it usually applies to all interest rates.

Since high-interest rates are usually not good for the market, a lower treasury rate equals a strong market for the most part.

Looking at mortgage rates, is that the same as the housing market?

The mortgage rates might dictate the housing market as the price of the houses is usually dependent on how high the mortgage rate is. A higher mortgage rate means lower high prices and vice-versa.

How does the housing market play into the stock market?

High-interest rates are bad for the market. If there is a high mortgage rate it’s most likely interest rates are high which as mentioned, is bad for the market.

High house prices (as long as they’re not too high) are generally good because it means that mortgage rates are low, which in turn means interest rates are low.

What do I need to know about the housing market to predict the stock market?

Some things to look at in the housing market are:

  • foreclosures
    • a lot of foreclosures are bad
    • foreclosures are bad for the market because when this happens, usually people and banks have no money
  • housing prices
    • high house prices are good but not too high
  • mortgage rates
    • it’s better when mortgage rates are low

What causes a recession?

When people stop buying services/products. People have no money to buy and in turn, businesses sell less so they don’t make as much money either. This affects the stock market because:

  1. People don’t have money to invest
  2. Companies earnings report don’t do as well so their stock will most likely go down

Resources to stay up-to-date with the housing market

Zillow Research

Redfin Reports

Have any questions or comments? Write them below!

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