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U.S. mortgage interest rates jump to 7.16%, highest since 2001

reuters.com

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Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#81

Post by bushbaba »

jacv wrote: post #25
bfrog wrote: post #5

This will pressure prices down presumably which is a good thing for cash buyers but basically no one else.

I would think this could help with people trying to buy their first place. I think a fair amount of people - particularly those in HCOL cities - could afford monthly payments that are on the high side, but saving for a 20% deposit has been more difficult because of how high prices have been (ie, stuck in a rent cycle of only saving a bit because of how high rent is and so on).

Same markets offer 5% or 0% down loans. Financing isn’t the problem it’s the monthly cost. Rent is cheaper than owning in Seattle, LA, and SF metro areas for a large portion of the housing stock.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#83

Post by colinmhayes »

bjourne wrote: post #43

Isn't there "midterm" elections coming up in two months in the US? Aren't moves like spiking the rent to induce mass unemployment likely to benefit the Republican party? It can't be a winning strategy.

Interest rates are effectively set by the federal reserve which is a non-partisan institution that doesn't answer to congress or the president, at least that's the idea.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#84

Post by trashtester »

brink wrote: post #19
rossdavidh wrote: post #7

If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…

I don't see how they're going to go down that low. To do that, you need to have oversupply, or you need to be able to build a house for that price (building prices are up and will likely stay up due to prices of materials, living cost, and energy). Employers are having trouble finding labor, the government has its foot on the neck of the non-green energy sector, the world is not producing like it used to when prices…

One thing about housing, is that if more people live in each unit, demand can go down quite a bit. This isn't happening during a 2 year bust, but if inflation becomes endemic, people may be forced to. Some unhappy couples may continue to live together, children don't leave their parents' homes, students that shared an apartment while studying continue to do so after they start working, etc. Also, more people who own houses may decide to rent out half.

The price at the margin will never exceed what the marginal buyer is able to pay, regardless of supply.

What you get in a case like thiswhere even parts of the middle class may be essentially homeless, is widespread social unrest. At that point, expect regulators and governments to take measures to make sure the supply of housing becomes big and cheap enough for at least the lower middle class to be able to afford a place to live (even if they have to rent). Unrest is more damaging to them than some unhappy homeowner lobbyists.

And by cutting the red tape, it's possible to make housing MUCH cheaper than it is today (at least per housing unit, if not by area).

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#85

Post by bushbaba »

mindslight wrote: post #20
bfrog wrote: post #5

This will pressure prices down presumably which is a good thing for cash buyers but basically no one else.

It's a good thing for everyone. Even if you have a mortgage, when the principal is lower you can pay it off sooner by paying more than the minimum. This inflated asset bubble is strangling our society, especially for housing.

If home values decline by 50%. So do property tax revenues. You’d have stated needing to layoff a large portion of their police and education staff.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#86

Post by irrational »

rossdavidh wrote: post #7

If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…

We purchased a year ago with a 2.4% mortgage. We are planning on staying here till retirement. I don’t much care where home prices go in the short term, but I do wonder where they will be in decades from now.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#87

Post by symlinkk »

I’m pretty sure I bought at the worst possible time (March). Every month that goes by, thousands of dollars of my net worth disappear because of circumstances completely out of my control. It makes me doubt the value of hard work - sure, if you slave away at your desk job you can earn maybe an extra $30k a year, but the guy down the road who just happened to buy a house at the right time earned an extra $300k over the last few years doing nothing.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#88

Post by Turing_Machine »

Sohcahtoa82 wrote: post #74
ren_engineer wrote: post #35

Earlier quoted context omitted.

you think people are going to pay mortgages they are massively underwater on? This also ignores the fact that the Fed's stated goal with raising interests rates is to increase unemployment to slow inflation. You are already seeing the results in quarterly financials. Once layoffs start happening people won't have an option but to sell when they can't make payments

> you think people are going to pay mortgages they are massively underwater on? Yes? Why wouldn't you? It seems pretty short-sighted to just put your arms in the air, give up, get foreclosed on, lose your home, and have your credit be absolutely wrecked for the next 7 years. Just keep making your payments and ride it out. The market will eventually recover. I think the only reason to give up is if you fell for the sc…

> Why wouldn't you?

Well, you could ask the very large number of people who defaulted on their underwater mortgages in previous housing crashes.

Does everyone do it? No.

Do a significant number of people do it? Absolutely.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#89

Post by SevenNation »

algoatecorn wrote: post #44
rossdavidh wrote: post #7

If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…

Most of the people I speak to who locked in Current renters will have lower potential to save on a monthly basis, only to get 30-40% off on their first home with a >7% interest rate. If you sum the lost savings from rent plus the additional interest payment, it is uncertain whether that is the best strategy. That is also assuming real estate prices in certain regions wont hold stronger value, which they probably will…

> Most of the people I speak to who locked in One way to look at this is to ask people what they plan to do. Another way is to look at what they've done.

According to this article, the average length of time spent in a house is 8 years:

> https://www.thezebra.com/resources/home/average-length-of-ho...

So unless those people you know just moved in, they're X years into a average 8 year occupancy.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#90

Post by lotsofpulp »

test6554 wrote: post #71
post_break wrote: post #62

Refinancing at 2.5% is the closest I have ever been to winning the lottery. I can't imagine trying to buy a house or finance a car right now, especially with dealers charging crazy ADMs. Something is going to have to give.

I wish there was a p2p lending program where I could make some cash and people with good credit could borrow for better rates than banks offer.

There is, just put a sign outside your door or post an ad on Craigslist/Facebook/etc.

Although, I hope you have a good reason to think you are better at predicting probabilities of default than professional lenders with teams who do it day in and day out.

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