The Buyer Purchasing Power Index (BPPI) was calculated for June at the beginning of January, and the value landed at -6.9. This negative value means that buyers are able to borrow less with the same amount of income, in this case, 6.9% less. The cause is a steady increase in year-over-year mortgage rates after a spike in January, reaching an average rate of 4.4% for fixed-rate mortgages (FRMs) in June.
Short term rates, which the Fed is also raising, also affect FRMs. In addition, the Fed is selling mortgage-backed bonds, further increasing FRM rates. Rates are expected to continue increasing throughout the year, and the BPPI is expected to continue its downward trajectory for the next decade. This will result in pressure to lower prices as fewer buyers will be able to acquire loans with their current level of income.