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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

#131

Post by jollyllama »

mym1990 wrote: post #65
test6554 wrote: post #53

Earlier quoted context omitted.

A good time to be looking for a house. A terrible time to be looking for a mortgage.

It’s still not a great time to look for a house. Prices have come down some but no where near enough to offset how much they went up by in the first 2 years. I guess if someone’s price anchor has been reset to the new normal, a house now looks great…

It can go one of two ways. Inventory continues its years long downward trend as people stop selling due to the price drops. Or, the increased rates combined with price drops trigger a wave of foreclosures and the market crashes hard. I think the former is more likely.

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

#132

Post by andsoitis »

jakemoshenko wrote: post #78
epgui wrote: post #57

Earlier quoted context omitted.

The federal reserve is independent from government. This has nothing to do with any political party.

If that's true, why did the fed stop hiking rates in 2019?

This article reports why: https://www.cnbc.com/2019/03/20/fed-leaves-rates-unchanged.h...

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

#133

Post by kotlin2 »

toomuchtodo wrote: post #75
kotlin2 wrote: post #42

Earlier quoted context omitted.

In most states, lenders have recourse. So if you stop paying your mortgage, the bank will foreclose on your home and then come after your other assets to make up the difference in what you owe vs. what the home is currently worth.

I’ve defaulted on two mortgages in a recourse state, one primary residence, one investment property. Neither was pursued. While extreme, you can always move to Texas or Florida; they have incredibly strong creditor protections making you mostly judgement proof. Depends on your threat model, exposure, and risk tolerance. (not legal advice, educational purposes only)

How much did you owe after the properties were sold?

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

#134

Post by epistasis »

buscoquadnary wrote: post #120
epistasis wrote: post #68

Earlier quoted context omitted.

I sometimes hear people say this, but it makes zero sense to me, and I can never get anybody to explain what they mean by it. Could you try to explain how we have enough houses but somehow corporations are the problem?

Basically RE prices went through the roof and became an object of investment that gained in value during a time when money was cheap and cash was a bad place to store it. This caused management funds, BlackRock Berkshire etc, to start purchasing the homes as investment vehicles. These vehicles then will either sit on a house or simply rent the house out at a rate that makes fiscal sense, regardless of the economic re…

I can understand a small time house investor not renting out the house, and I see that all around me, in a very very tight housing market. Small time owners of 2-3 houses, especially those who have paid off the mortgage, avoid the hassle of renting because they have limited time to seek out tenants and deal with them, or limited tolerance for risk from a bad tenant.

But I can not for one moment understand a cooperate buyer not renting it out; they have more than enough capacity to rent out homes, they can spread risk across lots of properties, and any time not spent renting is merely money left on the table, which would come back to bite any manager that is leaving a lot of money on the table.

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

#135

Post by mywittyname »

pchristensen wrote: post #98
Sohcahtoa82 wrote: post #74

Earlier quoted context omitted.

> 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…

I bought a house in the Chicago suburbs in August 2007 for $275k. I short sold it 4 years later for $115k. It sold 2 years ago (13 years afer I bought it) for $210k. "Eventually" is doing a lot of work in your comment.

People seem to look at aggregate housing, and pretend that every buyer's experience will be "about average".

Buying a house is akin to putting your retirement into the stock of a single company. In that situation, it doesn't matter what the S&P500 tends to do on a long enough timeline.

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

#136

Post by MuffinFlavored »

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 If this keeps supply low, why does anybody have hope housing prices will fall in a meaningful way over the next 3 years? (aka, people on the sidelines waiting for a pullback)

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

#137

Post by avgDev »

SevenNation wrote: post #124
avgDev wrote: post #117

Earlier quoted context omitted.

It is recommended that when you buy a house you buy it long term 5+ years. It is recommended that when you purchase index funds as investment you buy and hold long term 5+ years. The reason for this is because prices will fluctuate SHORT term, but generally are very stable long term and provide a return on investment. If we take a look at the current situation, even if someone becomes underwater on their house, they…

> Real estate IS A LONG TERM investment, not day trading. US history over the last 3 decades suggests otherwise.

Are you just saying things or have you actually looked?

Average home price in 1965 was $21k.

Average home price in 2020 was $514k.

Long term after every drop the prices have surpassed ATH.

https://fred.stlouisfed.org/series/ASPUS

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

#138

Post by quonn »

mupuff1234 wrote: post #91
algoatecorn wrote: post #44

Earlier quoted context omitted.

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…

Not selling doesn't magically make your house keep it's market value. As long as there's someone in the vicinity selling at a lower price your house would lose value either way. And there's always someone selling.

If most people don't sell and there is high demand, then the few properties that will be on the market will be gone quickly and people will compete, driving up the prices.

So it really depends on how large the amount of people who don't want to but have to sell is compared to the amount of people who are looking to buy.

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

#139

Post by epistasis »

kitsunesoba wrote: post #107
epistasis wrote: post #68

Earlier quoted context omitted.

I sometimes hear people say this, but it makes zero sense to me, and I can never get anybody to explain what they mean by it. Could you try to explain how we have enough houses but somehow corporations are the problem?

Corporate buyers are one of the many exacerbating factors, and I think that’s what most are saying when they say corporate home buying is a problem. In other words, there aren’t enough homes and corporations sitting on some percentage of them is making the situation that much worse.

I don't understand how a corporate purchaser is worse than any other investor; I live in an area with almost only single family homes, and a huge fraction of them are investor owned and rented out. The small time land lords have a huge variance in how well they behave, but I'm not sure why corporate landlords are worse.

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

#140

Post by avgDev »

ltbarcly3 wrote: post #12

How this effects housing prices: Housing prices are determined largely by what payments people can manage to make. At 3.22% (the approximate rate on Jan 1 2022) A $2000 payment can finance $462,000. At 7.7% (what google says is the current average rate) it would only finance about $280,000. At 12% (my personal guess at where rates will peak in about 18 months before quickly returning to around 7% for several years af…

I guess fortunately for the economy 90% of loans are fixed-rate. There might be some deals to be had if the high rate is sustained for a few years.
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