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Mortgage Rates Hit 5.78%, Highest Level Since 2008

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Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#41

Post by leekh »

lizknope wrote: post #34

My parents bought our first house in 1979 and they said the interest rate was 12% I bought my house in 2002 and had a 6.5% interest rate. That was the lowest rates had ever been at least going back to 1970. A year later I refinanced down to 5.5% and then in 2010 down to 3% before paying it off a few years later. So yeah 5.78% is higher than the rates of the last 15 years but historically it is still quite low.

Yeah, but look at the case-shiller or the house price to avg incomes[1]

Back in the 80's homes were 4-5x the avg income

2002 5-6x

Now 8-9x

I rather buy something on 12% that's 4x my income than what my option is today.

[1] https://www.longtermtrends.net/home-price-median-annual-inco...

Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#42

Post by mancerayder »

treyfitty wrote: post #4

For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."

Historically affordability (defined by home prices, interest rates and income levels) has never been so bad.

Let's hope prices level things out. People always mention how high interest rates used to be.

Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#43

Post by fatnoah »

listenallyall wrote: post #21
fatnoah wrote: post #6

Earlier quoted context omitted.

The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.

On the other side of the coin, you used to be able to earn 6, 7, 8%, maybe even more, just by parking money in a savings account. I'd love to find a bank today offering even just 3%.

True, I was getting 5% interest on my checking account.

Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#44

Post by SilasX »

fatnoah wrote: post #6
treyfitty wrote: post #4

For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."

The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.

Another interesting landmark: there’s a Law & Order episode from 1996 where they suspect that a judge’s 5% fixed mortgage is a bribe because, as the detective notes, “I had to get on my knees just for a seven percent adjustable.”

https://subslikescript.com/series/Law__Order-98844/season-6/...

Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#45

Post by incomingpain »

treyfitty wrote: post #4

For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."

The percentage doesn't matter a great deal. It has everything to do with serviceability of the debt.

If homes were $150,000 for 3bed 2 bath. 20% interest rate on mortgage would be $3000/monthly or $36,000/year amortized for 10 years.

Kind of crazy but doable. The key point is the $150k and not $1mil. So as interest rates go up, the affordability of the homes goes down and so they cant sell for the same $.

The average rent price will also be really similar to whatever this service rate is. So if the best mortgage rates are coming in around $3000/month. Rent will be that much more or less. The key ROI or rent vs buy is that you are paying into equity when buying. So you'll find rent vs buy is usually measured in months. That is to say, if you're staying in the general area of the city or whatever. You might as well buy so long as you'll stay for about a year.

Though this is a risk. If housing crashes in price because of brain drain exodus out of a region, or immigration were to be shut down, or politicians in general being bad causing the crash. Then you might end up owing more than its worth. However, it's an important detail, much of a country's wealth is in its developed land. So when housing crashes, it's literally dropping the wealth of the country. That's a sure way to get your head chopped off as a politician.

Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008

#46

Post by dragonwriter »

EricE wrote: post #25
noobermin wrote: post #15

Earlier quoted context omitted.

How much influence do investment groups really have on the housing bubble?

Someone has to be buying up all those houses in CA that the people fleeing the state are still selling at inflated prices. If the net population of a state has dropped enough for them to loose at least one seat in the house of representatives, but houses are still selling for high prices than logically it's not people buying up those houses.

> If the net population of a state has dropped enough for them to loose at least one seat in the house of representatives,

While California is estimate to have lost some population after the 2020 census, the seat lost due to the 2020 census was with a population gain from 2010. The fixed number of seats means gaining population at less than the national average can result in seat loss (more easily the more seats you have to start with.)

With the right nationwide distribution of population gains, a state could even lose seats while gaining population at or above the national average rate (especially if some of the states that start out with population below the average size of a house seat are gaining population slower than the national average, since they can't lose seats in any case.)

> but houses are still selling for high prices than logically it's not people buying up those houses.

In California as everywhere else in the nation, the number of active listings has fallen dramatically in recent years; prices are high not because demand is high (particularly), but because supply has become very low. It doesn't take many people trying to buy to drive market clearing prices high when almost no one is selling.

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