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

reuters.com

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

#111

Post by ok_dad »

potatolicious wrote: post #73
powvans wrote: post #56

Earlier quoted context omitted.

I think it's a confluence of a few things... 1) You lock your mortgage rate for 90 days, so 90 days ago rates were significantly lower. These will be rolling off soon and by early next year the prevailing rates will obviously be much higher. 2) People are paying points up front to buy down the interest rate. 3) Jumbo mortgages are still much cheaper than conforming (I think a full point).

Some other key things: 4) Lots of people buying with all-cash or mostly-cash. You're not at all rate-sensitive if you're a cash buyer. 5) A lot of these cash-heavy buyers are powered by generational wealth. 6) The housing shortage in the US is incredibly acute, so much so that the market will continue chugging along even as borrowing conditions worsen considerably. I bought a couple of years ago when the market was r…

Yea, in my home we have extremely high prices for homes and the only thing my family can do is rent a house owned by family. We can't find a house to rent on the real market (this house is semi-broken-down and normally wouldn't be rented to anyone), and we certainly can't afford to buy, so I guess we'll live here until we inherit a home from family or maybe get kicked out by my wife's cousin once he inherits this one!

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

#112

Post by oblio »

foobarian wrote: post #82
LandR wrote: post #18

Earlier quoted context omitted.

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…

Yes well, that's probably a lot better than paying a typical USA real estate tax, which must be paid quarterly and non-payment means the enclosing town takes your house away. What are RE taxes like in London? Do rich foreigners pay anything to park money into central London properties?

Stamp duty is on top of property tax.

Stamp duty is paid when you buy something.

After you bought it, yes, you have to pay a yearly property tax in many places in the world.

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

#113

Post by aschearer »

hotpotamus wrote: post #108
aschearer wrote: post #95

People are bringing up that past rates were higher but leaving out how much lower past prices were. Have a look at rates over time[1] vs median home price[2]. Yes rates were 16% in 1980 but the median home was $64,000. That's $230,000 in today's dollars. If you'd prefer to pick a time when rates were more comparable, how about 2001 at 7%. The median home price was $180,000. $301,000 in today's dollars. Today's median…

Hasn't square footage also trended up? That's why you use something like the Case-Shiller index to chart housing prices. I know those components go into it and perhaps others.

OK here's the Case-Sheller index[1].

Running the examples from before:

1980: 63 (actually for 1987, earliest in the chart)

2001: 110

2022: 305

I'm no economist so I won't try to interpret these numbers, but if higher is worse then it supports my original point.

[1]: https://fred.stlouisfed.org/series/CSUSHPISA

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

#114

Post by sytelus »

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…

Can't you buy now at high APR and then refinance later? I would think these large rates would not last more than 2-3 years. You will take some hit for short period but also might get better deal as there are not a lot of buyers. After rates come down, you might easily end up paying 5-10% over asking price. Is there any issues in refinancing later?

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

#115

Post by endisneigh »

sytelus wrote: post #114
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…

Can't you buy now at high APR and then refinance later? I would think these large rates would not last more than 2-3 years. You will take some hit for short period but also might get better deal as there are not a lot of buyers. After rates come down, you might easily end up paying 5-10% over asking price. Is there any issues in refinancing later?

you assume you can time the bottom of prices with the rates and that rates will come down anytime soon

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

#116

Post by hotpotamus »

aschearer wrote: post #113
hotpotamus wrote: post #108

Earlier quoted context omitted.

Hasn't square footage also trended up? That's why you use something like the Case-Shiller index to chart housing prices. I know those components go into it and perhaps others.

OK here's the Case-Sheller index[1]. Running the examples from before: 1980: 63 (actually for 1987, earliest in the chart) 2001: 110 2022: 305 I'm no economist so I won't try to interpret these numbers, but if higher is worse then it supports my original point. [1]: https://fred.stlouisfed.org/series/CSUSHPISA

Yep, I'm not disagreeing with your original point, just pointing out that these comparisons have a few variables to consider. At least someone already went to the trouble of creating an index for it.

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

#117

Post by yieldcrv »

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…

Give it time.

People with adjustable rates haven't been adjusted yet. People that locked in rates at the lows are just fine. Only some small percent of people with mortgages would be affected right now, and optimistic people that think they can pay the rates have a few months before they realize their budget didn't fit. The cash buyers have slowed down. Just not a flood of foreclosures yet.

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

#118

Post by sytelus »

potatolicious wrote: post #73
powvans wrote: post #56

Earlier quoted context omitted.

I think it's a confluence of a few things... 1) You lock your mortgage rate for 90 days, so 90 days ago rates were significantly lower. These will be rolling off soon and by early next year the prevailing rates will obviously be much higher. 2) People are paying points up front to buy down the interest rate. 3) Jumbo mortgages are still much cheaper than conforming (I think a full point).

Some other key things: 4) Lots of people buying with all-cash or mostly-cash. You're not at all rate-sensitive if you're a cash buyer. 5) A lot of these cash-heavy buyers are powered by generational wealth. 6) The housing shortage in the US is incredibly acute, so much so that the market will continue chugging along even as borrowing conditions worsen considerably. I bought a couple of years ago when the market was r…

I don't think you should ever buy home all-cash. That would be financially stupid move. Even at 6% rates, you can get far better return on your capital on long term basis (>15 yrs). Additionally, you can always refinance later whenever rates goes down. So, paying all-cash for a house is losing a lot of ROI on your capital and is plain stupid.

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

#119

Post by sytelus »

endisneigh wrote: post #115
sytelus wrote: post #114

Earlier quoted context omitted.

Can't you buy now at high APR and then refinance later? I would think these large rates would not last more than 2-3 years. You will take some hit for short period but also might get better deal as there are not a lot of buyers. After rates come down, you might easily end up paying 5-10% over asking price. Is there any issues in refinancing later?

you assume you can time the bottom of prices with the rates and that rates will come down anytime soon

You don't have to wait for bottom. Any time rates come down by say 30%, you refinance. You keep doing it so eventually you settle into 2-3% regim.

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

#120

Post by smt88 »

sytelus wrote: post #118
potatolicious wrote: post #73

Earlier quoted context omitted.

Some other key things: 4) Lots of people buying with all-cash or mostly-cash. You're not at all rate-sensitive if you're a cash buyer. 5) A lot of these cash-heavy buyers are powered by generational wealth. 6) The housing shortage in the US is incredibly acute, so much so that the market will continue chugging along even as borrowing conditions worsen considerably. I bought a couple of years ago when the market was r…

I don't think you should ever buy home all-cash. That would be financially stupid move. Even at 6% rates, you can get far better return on your capital on long term basis (>15 yrs). Additionally, you can always refinance later whenever rates goes down. So, paying all-cash for a house is losing a lot of ROI on your capital and is plain stupid.

Lots of people buy with cash to win bidding wars. Sometimes they also just hate the idea of a mortgage hanging over their heads.

I've also known people who have enough familial wealth that they just don't care.

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