Bank of America, whose share of the mortgage market has plummeted to 4.2% in 2012 from 22% in 2009, believes interest rates are preparing to rise. As stated in a Wall Street Journal article in today’s print edition, entitled, “Bank of America Preparing New Push in Mortgages,”
“Some analysts say a retail-only strategy , which carries high overhead costs but is profitable during periods of heavy refinancing, could prove difficult when interest rates rise and home purchasers take a larger share of the market — something they expect to happen in the next year or two.”
There it is: Bank of America is expecting rates to rise within the next 1-2 years as more home purchases take a larger share of the market. The likely correlation here is that once more buyers step into the market, inventory constricts, prices rise, leading to a rise in interest rates to slow the acceleration of home prices.