Mortgage Rates Hit 5.78%, Highest Level Since 2008
1–10 of 46 posts
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#2What's going to give first? Interest rates? House Prices?
I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#3Ironically, my local credit union dropped their 30 year fixed rate from 6.0% to 5.875% after the FED raised rates yesterday. I guess they raised them less than they were expecting?
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#4For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#5What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
My personal opinion, based on what happened in 2008 in my area, is that the exact impact will be local. I think in some traditionally desirable places, prices will level out or only decrease slightly as interest rates rise. Lower inventory will help keep these prices up as increased competition keeps prices inflated despite higher interest rates.
In other places, I think prices will fall as rates rise, since overall affordability will go down, but there won't be as much buyer competition to prop prices up.
At some point, the dam will break and people who've been sitting on the sidelines and accumulating large down payments will start bidding prices up again, causing more sellers to list, which in turn will get more buyers involved.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#6For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."
The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#7Ironically, my local credit union dropped their 30 year fixed rate from 6.0% to 5.875% after the FED raised rates yesterday. I guess they raised them less than they were expecting?
Sounds like they over-raised them prior to the FED rate hike.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#8What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
Same boat. I did some investigation into historical interest rates vs. housing prices, and I learned that there's really only a weak correlation between housing prices and interest rates (and funnily enough, it's a positive correlation).
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#9What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
Interest rates are highly sensitive to markets that have fairly tight feedback loops.
Home prices are set by relatively few transactions taking place at any one time in a close geographic area. There’s going to be a good amount of lag between higher rates prices actually dropping, especially given that the trend was increasing prices. We’ll likely see a leveling off first, then a degree of fall.
It’s hard to speculate about how much the prices will fall, ultimately homeowners make up such a large proportion of the population that they have a lot of leverage as a voting block, and government is responsive to their desire to protect their investment. Given the degree of run up we saw during, and even prior to, COVID, I’d estimate that there is a lot of room for prices to come down, but a lot of that drop is going to be driven by policy, not “free” markets.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#10What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
Same boat. I did some investigation into historical interest rates vs. housing prices, and I learned that there's really only a weak correlation between housing prices and interest rates (and funnily enough, it's a positive correlation).
There’s too many confounding factors to drawn conclusions based on regressing interest rates vs home prices.
Interest rates are strongly correlated with government policy, which is crafted to respond to overall growth and inflation, which drive home prices.