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Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

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Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#51

Post by topspin »

fy20 wrote: post #39

in the US I find it strange that the mortgage interest rate is almost always fixed for the life of the mortgage. If you took a mortgage at 2% which is well above the Fed's interest rate, then isn't the lender loosing money? Or is that not how it works? I'm from the UK where mortgages can fixed for a definite period, usually 2-5 years, then it changes to a variable rate mortgage (with the same provider), but there's a…

> the mortgage interest rate is almost always fixed

It's policy. The New Deal created a secondary mortgage market through Fannie Mae (and later Freddy Mac) that normalized mortgages to 30 year fixed. There are many ways to structure mortgages in the US and not all mortgages are fixed, but the typical mortgage is because those mortgages are the most liquid given the structure of the US secondary mortgage market.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#52

Post by ackbar03 »

larrymyers wrote: post #12
blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

There's been a lot of news coverage lately about how low inventory is going to continue to keep housing prices high, despite mortgages going up. Basically people with 2%-3% mortgages are going to sit tight, because they can no longer afford a comparable house were they to move. Low inventory means prices won't drop as much as people hope with rising interest rates. The only wild card here is what will happen with cas…

This whole inventory argument is genuinely confusing to me and I never quite understood why everyone was talking about a sudden inventory "shortage" around 2020. Did a large number of houses suddenly get destroyed? Or was there a sudden massive increase in population?

If neither of those things happened, then in my opinion there isn't actually a "shortage", and the extra demand is maybe just from remote working and low interest rates. If those factors retreat and become less favorable, I presume the demand will retreat and new buyers will crawl back to wherever they were living before and this "shortage" will disappear as quickly as it came.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#53

Post by [deleted] »

blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

[deleted]

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#54

Post by andromeda-brain »

lotsofpulp wrote: post #50
eo3x0 wrote: post #28

Housing prices are dropping, as would be expected with the interest rate hikes. House prices are set at the margins, just like any asset. Even if the folks with 3% mortgage rates sit tight and don’t sell, there will still be downward pressure on prices because prices are not determined by non-transactions. There are plenty of listings for those who need to exit the market and liquidate, driving inventory up. Just a q…

I like how Redfin has deleted price changes for recently listed homes. You can see the same house on Zillow list at $1.1M in Jun, and then re-list at $900k in Aug, and then at $800k in Oct. But Redfin intentionally removed it in the past couple months, and now they only show the most recent list date and price.

Would you be willing to share a specific property as an example?

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#55

Post by x86_64Ubuntu »

pcurve wrote: post #17
blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

Another way of looking at it... if you are taking out a $650,000 30 year 3% fixed loan, it is $2,740/month At the current rate of 7.5%, it's $4,545.

That really puts it into perspective.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#56

Post by jjeaff »

ackbar03 wrote: post #52
larrymyers wrote: post #12

Earlier quoted context omitted.

There's been a lot of news coverage lately about how low inventory is going to continue to keep housing prices high, despite mortgages going up. Basically people with 2%-3% mortgages are going to sit tight, because they can no longer afford a comparable house were they to move. Low inventory means prices won't drop as much as people hope with rising interest rates. The only wild card here is what will happen with cas…

This whole inventory argument is genuinely confusing to me and I never quite understood why everyone was talking about a sudden inventory "shortage" around 2020. Did a large number of houses suddenly get destroyed? Or was there a sudden massive increase in population? If neither of those things happened, then in my opinion there isn't actually a "shortage", and the extra demand is maybe just from remote working and l…

The sudden inventory shortage was due to the pandemic. Many people took their houses off the market in order to wait and see how things were going to play out. Hiring slowed down as well and many that did change jobs went to remote jobs. You don't usually have a reason to move if you don't have a job change. Then of course lots of people working from home caused more demand for homes as those in smaller apartments or houses decided they needed to upgrade.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#57

Post by fratlas »

Test0129 wrote: post #49
bequanna wrote: post #43

Earlier quoted context omitted.

> House prices are set at the margins, just like any asset. Even if the folks with 3% mortgage rates sit tight and don’t sell, there will still be downward pressure on prices because prices are not determined by non-transactions. YES! There is a sort of delusion that has taken hold of people who became “house rich” in the past couple years. They seem to think that if they don’t sell, their house will still be worth w…

Similarly, the delusion of the "house poor" hoping for another 2008 is frankly hilarious. The difference is, if you picked up a house at 2.7% you will be winning for a long time. There are fewer ARMs, which means a small more protracted "collapse". Housing supply is still non-existent and will be into the near future. Wages will need to keep pace with housing costs in order to provide anyone a chance to succeed. Even…

> you lost out on a literal once in a lifetime opportunity

I don't think anyone can make claims like this, lots of people made the right decision by not buying into an inflated market with job instability around the corner. I think the correction is needed, any people who didn't overextend will be fine if they intend to stay put for 5-15 years.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#58

Post by csomar »

x86_64Ubuntu wrote: post #55
pcurve wrote: post #17

Earlier quoted context omitted.

Another way of looking at it... if you are taking out a $650,000 30 year 3% fixed loan, it is $2,740/month At the current rate of 7.5%, it's $4,545.

That really puts it into perspective.

The magic of compound interest over very long periods.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#59

Post by tinnou »

andromeda-brain wrote: post #54
lotsofpulp wrote: post #50

Earlier quoted context omitted.

I like how Redfin has deleted price changes for recently listed homes. You can see the same house on Zillow list at $1.1M in Jun, and then re-list at $900k in Aug, and then at $800k in Oct. But Redfin intentionally removed it in the past couple months, and now they only show the most recent list date and price.

Would you be willing to share a specific property as an example?

Zillow: https://www.zillow.com/homedetails/1488-Sunland-Ct-San-Jose-...

Redfin: https://www.redfin.com/CA/San-Jose/1488-Sunland-Ct-95130/hom...

The history between May and August was deleted on Redfin. Either there is a way to pay Redfin to delete history or @lotsofpulp is right, or maybe a convenient bug?

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#60

Post by lotsofpulp »

andromeda-brain wrote: post #54
lotsofpulp wrote: post #50

Earlier quoted context omitted.

I like how Redfin has deleted price changes for recently listed homes. You can see the same house on Zillow list at $1.1M in Jun, and then re-list at $900k in Aug, and then at $800k in Oct. But Redfin intentionally removed it in the past couple months, and now they only show the most recent list date and price.

Would you be willing to share a specific property as an example?

I might be wrong and have just looked at a couple houses where the data is missing now. I set the Zillow filter to “price reductions”, which Redfin does not have, but I compared a few homes and both listed price changes.

The houses I had favorited with the missing price changes are gone from my Redfin favorites list now (owner decided to remove listing?).

Zillow definitely has better history though, and a filter option to show price reductions.

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