U.S. mortgage interest rates jump to 6.52%, highest since mid-2008 • Hacker News Board

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#41

Post by xxpor » Wed, Sep 28, 2022, 4:17 PM UTC

LandR wrote: post #18

dymk wrote: post #7

Earlier quoted context omitted.

Why root for the downfall of Redfin and the like? They were finally a lower cost alternative to the stranglehold that RE agents have had on sellers for decades. Why should it cost 6% to sell a house?

Do you have to pay tax to the Government where you live to buy a house ? I'm wondering if Stamp Duty is just a UK thing. Here we pay a tax to the government when you buy that is based on the value of the house you are buying. Up to £250,000 Zero The next £675,000 (the portion from £250,001 to £925,000) -5% The next £575,000 (the portion from £925,001 to £1.5 million) -10% The remaining amount (the portion above £1.5…

Like most things in the US, it varies wildly by location. In Seattle, there's a 0.50% real estate excise tax that the seller pays (theoretically it doesn't matter if the seller or buyer pays it, but practically speaking it's better for the seller to pay since they're the ones with cash in hand.) I'm fairly certain that WA can't have graduated rates because our state constitution prohibits anything but a flat rate for nearly all taxes.

The list of all of the rates for WA: https://dor.wa.gov/sites/default/files/2022-05/84%200013_Jul...

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#42

Post by Supermancho » Wed, Sep 28, 2022, 4:18 PM UTC

jeffbee wrote: post #9

ramesh31 wrote: post #5

I'm all for it. If this edges out the razor thin margins that Redfin et. al. were making on the US housing market, let's go. As a first time homebuyer who would like to purchase a place to live, a few points of interest are not going to dissuade my decision. But I have a strong feeling that the REIT market will pop like the bubble that it is once the financials start looking unfavorable.

Imagine believing that Redfin has any influence on the U.S. homes market. The U.S. home market is worth ~50 trillion dollars. There are > 1.3 million homes for sale at this moment.

Everything is always for sale, listed or not. It's about the pricepoint and opportunity to leverage. 1.3M is just under 1%

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#43

Post by kube-system » Wed, Sep 28, 2022, 4:19 PM UTC

adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

> I have no idea who is buying houses at these prices

Only the most richest parts of the US have homes that start at $1m. And only a fraction of the people rich enough to live there can afford to purchase.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#44

Post by scrumbledober » Wed, Sep 28, 2022, 4:19 PM UTC

aschearer wrote: post #38

jeffbee wrote: post #16

Rates were higher than this continuously for 30 years up until about 20 years ago. It really is the recent rates that have been exceptionally low.

Why should we look at a period 20 years in the past for predictions about the future? 20 years ago Facebook didn't exist nor did the iPhone. For the last 10 years rates have been below 6%. It seems a strech to call a decade "recent."

to be fair these are usually 30 year loans that we're talking about.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#45

Post by memonkey » Wed, Sep 28, 2022, 4:20 PM UTC

mikeyouse wrote: post #13

Pretty crazy correction if you run the math on mortgage payments. I bought a place 1 year ago with a 2.75% rate. Say you're somewhere outside a major metro buying a $500k house. With a $100k down payment, a 2.75% rate equates to $1,633/month. A 6.5% rate equates to $2,500/month. With $600/month in taxes/insurance, the "don't spend more than 40% of your income on housing" rule means the necessary income to comfortably…

Here's my real life example:

I bought a house in 2009 @ 3.75% for 480k fixer-upper 1922 craftsman home in East Los Angeles area. My monthly payment was about $3200 because I could only afford ~4% down so we had to get PMI. At the time I made $110,000 and wife made $60,000. We put in about 50k into the house using my dad who is a general contractor (basically only paid for materials).

In Dec of 2021, we refinanced for 2.75% and our fixer-upper was valued at 750k which meant we could get rid of PMI and now our monthly payment is $2500 (including taxes). It's a massive drop for us now that we have a baby.

Literally none of this is possible right now. It feels like we've won the lottery. On top of that, we had a ton of help making this place a home because of my dad. For most families in the major metro areas, this is just totally out of reach now.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#46

Post by throwaway1777 » Wed, Sep 28, 2022, 4:20 PM UTC

rufus_foreman wrote: post #3

This is last week's data, Mortgage News Daily has the 30 year at 7.08% today. -- https://www.mortgagenewsdaily.com/mortgage-rates

Mortgage news daily is not a very accurate source

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#47

Post by yboris » Wed, Sep 28, 2022, 4:21 PM UTC

Reminds me of a tiny script I wrote to see (in your terminal) a graph and amortization table comparing different mortgage & investment scenarios:

https://github.com/whyboris/mortgage-and-investments

Hope it's useful to at least someone :)

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#48

Post by newaccount2021 » Wed, Sep 28, 2022, 4:21 PM UTC

dlp211 wrote: post #15

czbond wrote: post #4

Earlier quoted context omitted.

Wait until they see 2026. 10-14% mortgage (my prediction)

You think that we are going to have continued high inflation through 2026? Based on what?

No post body was provided.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#49

Post by conbandit » Wed, Sep 28, 2022, 4:21 PM UTC

adamredwoods wrote: post #20

I have been wanting to ladder up to a bigger house for a few years now. For a US$1M house, which is the going rate near my area, the jump from 6% to 7% is $5000/month apr interest to $5834/month apr (not including fees, taxes, and insurance). So to go back to the monthly of $5000 (which is out of my budget), a US$1M house would need to fall to $857,153. That is NOT happening around here. I have no idea who is buying…

Minor correction, but you probably mean Blackrock-type firms. Blackwater was a private military company.

Re: U.S. mortgage interest rates jump to 6.52%, highest since mid-2008

#50

Post by giantg2 » Wed, Sep 28, 2022, 4:21 PM UTC

hollywood_court wrote: post #34

endisneigh wrote: post #23

people who can buy a house all cash will be the real winners here. if and when rates go down, they can cash out refinance, and if they don't they will benefit from the downward pressure high rates create on prices. it's rich to be rich.

My wife and I have been waiting for this for a few years now. We live in a college town in the South and the prices here are fairly delusional. I imagine this will allow for some market correction and we’ll be able to get into a bigger home.

I sort of doubt it will correct very much. I assume a fair percentage of the homes are rentals. Landlords won't care to lower prices. They have a client based that's geographically constrained to the college and able to get easy money from the government.