"This is not conventional wisdom." = This time it's different.
I see you are slowly coming around in the face of the evidence.
Also the CPI used by the Fed doesn't even begin to tell the story of inflation--see shadowstats.com for a primer, you can use it as a start point.
Also look there for a primer on the bogus GDP number...which number, even after the historical revisions and subjective fudging, has just been revised down by the Atlanta fed to 0.9% seasonally adjusted annual rate, based on Q1.
BULLISH!
How do you reconcile those things? You cannot, through "conventional wisdom". You can if you understand that this era is about price inflation, and exclusivity, rather than on economic growth.
All the mechanisms are used to support prices. So we have a rate hike, so what? Everybody knows that people don't buy a house, they buy a monthly payment...so how do we keep those monthly payments down as the rates rise, without incurring a fall in price levels?
By changing the stated risk categories for borrowers, of course, by changing credit report criteria:
https://www.wsj.com/articles/credit-reports-to-exclude-certain-negative-information-boosting-fico-scores-1489338002
See how this is working? I have long opined that risk is not properly priced, and it starts with the large credit rating agencies. And it applies hugely to HYB's.