mortgage rates are up and the supply of homes for sale is down yet homebuying companies’ shares are surging rocket is up nearly 17 so far this week and uwm holdings is up about 16 online listing and realestate services company redfin is up 22 so what gives with the latest consumerprice index data being taken by many as a sign that the federal reserve will soon halt rate increases some investors might be betting that will help take the pressure off mortgage rates too of course mortgage rates and other interest rates do not move in lockstep one factor behind rising homeborrowing rates has been a widening spread between treasuries and mortgage bonds which has been driven by other factors like banks’ need to sell bonds according to freddie mac’s most recent national average tracker 30year fixed mortgage rates just last week hit their highest level this year at 681 still the mortgage bankers association’s latest forecast is for mortgage rates to fall to 58 by the end of this year and then 49 by the end of 2024 investors may also be betting that recent dire indicators for mortgage volumes could represent a nadir analysts at kbw at the beginning of the week raised their price targets and estimates for rocket uwm pennymac financial services and mr cooper group in a note kbw analysts said they expect an increase in mortgage volumes in the second quarter “largely driven by seasonality” they said that “both gainonsale margins and volumes appear to have bottomed” in the first quarter gainonsale margins measure the profitability of mortgages sold to investors those can rise if more mortgage companies exit the business during these lean times giving the remaining players pricing power they are also an input into mortgage rates even so this week’s move in mortgage stocks is a surprisingly big vote of confidence “the strong move in the stocks is confusing with the thirtyyear mortgage rate still hovering around 7” says kbw analyst bose george there remain plenty of hurdles for mortgage volumes more than 60 of existing mortgage holders have firstlien loans with rates below 4 according to black knight that is a major disincentive to sell inventories have dropped in 95 of major markets this year black knight said in a may report but as always with markets it is often when expectations are lowest that the potential for a bounceback is the highest