Mortgage Rates Hit 6.92%, the Highest in 20 Years

[PatMiles]

Mortgage Rates Hit 6.92%, the Highest in 20 Years

Mortgage rates have more than doubled this year as the Federal Reserve has moved to combat inflation.

www.marketwatch.com

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Mortgage rates on a 30-year fixed loan are at the highest levels in 20 years.​

Andrew Harrer/Bloomberg

The rate on a popular type of home loan increased this week to its highest level in 20 years, according to data released Thursday.


The average rate on a 30-year fixed loan increased to 6.92% as of Thursday, according to the results of Freddie Mac’s weekly Primary Mortgage Market Survey—the highest such rate since April 2002.


Mortgage rates have more than doubled this year as the Federal Reserve has moved to combat inflation. “We continue to see a tale of two economies in the data,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously.”

Prospective buyers have pulled back in recent months as high mortgage rates have weighed on home loan demand. The volume of applications for a loan to purchase a home last week—a leading indicator of buyer demand—was 39% lower than the same week last year, the Mortgage Bankers Association said earlier this week.

Recent inflation news has the potential to keep rates high. Inflation measured by the Consumer Price Index in September was hotter than expected, according to data released Thursday. The 10-year Treasury yield, with which mortgage rates often move, gained following the CPI release.

 

[Jgunner]

Damn. That will cool off the market...

 

[Huskydriver]

Damn. That will cool off the market...

Lol I don't see it cooling in my area

 

[MadDuner]

They are really working hard to bring back Carter's "Misery Index" any way they can.

 

[E. Bryant]

The total value of the US housing stock is $43.5 trillion, according to Zillow in January 2022. That was with rates at about 3.2%. With a rate of 7.8%, the same monthly payment today only goes 60% as far as it did nine months ago; at 10% APR, that value sinks to roughly half.

So we're staring at perhaps $20 trillion in lost wealth simply by bringing interest rates back to a historically normal value. This might represent the single largest private misallocation of wealth in world history, although the ongoing stock market implosion may yet challenge this claim.

 

[lash]

At some point, probably early next year, Fed will have start backing down the rates in order to avoid full blown recession. It’s actually necessary now. One cannot print trillions of dollars to hand out for votes and advance a social agenda without consequences.

 

[lariat]

The total value of the US housing stock is $43.5 trillion, according to Zillow in January 2022. That was with rates at about 3.2%. With a rate of 7.8%, the same monthly payment today only goes 60% as far as it did nine months ago; at 10% APR, that value sinks to roughly half.

So we're staring at perhaps $20 trillion in lost wealth simply by bringing interest rates back to a historically normal value. This might represent the single largest private misallocation of wealth in world history, although the ongoing stock market implosion may yet challenge this claim.

And yet, no one is stating this yet in the MSM. The other issue is how many of the homes that were already purchased are now seriously underwater or heading in that direction. Haven't we seen this play out in this century?

 

[lash]

Yes, but being upside down on home value only matters if you plan on selling. If you plan on living there for a period of time, it’s a non-issue.

If you were an investor intent on making some quick bucks and get stuck, that is on you. A blind man could see this coming.

 

[7.62willdo]

you ain’t seen nuthin yet…….

 

[Hobo Hilton]

At some point, probably early next year, Fed will have start backing down the rates in order to avoid full blown recession. It’s actually necessary now. One cannot print trillions of dollars to hand out for votes and advance a social agenda without consequences.

You have included "economics" and "politics" in the same statement.... There has been no let up of this administration printing and handing out "Free Money"... The FED Reserve can raise rates to the moon. But as long as the Free money flows the only thing that will continue is inflation.

 

[lash]

You have included "economics" and "politics" in the same statement.... There has been no let up of this administration printing and handing out "Free Money"... The FED Reserve can raise rates to the moon. But as long as the Free money flows the only thing that will continue is inflation.

Well, just try to separate economics and politics if you will. It’s not possible. Neither exists in a vacuum by themselves.

 

[babyguppy]

Ronald Regan once said, 'I should have hired a one-handed economist'

 

[babyguppy]

The total value of the US housing stock is $43.5 trillion, according to Zillow in January 2022. That was with rates at about 3.2%. With a rate of 7.8%, the same monthly payment today only goes 60% as far as it did nine months ago; at 10% APR, that value sinks to roughly half.

So we're staring at perhaps $20 trillion in lost wealth simply by bringing interest rates back to a historically normal value. This might represent the single largest private misallocation of wealth in world history, although the ongoing stock market implosion may yet challenge this claim.

"although the ongoing stock market implosion may yet challenge this claim."

I'm wondering, if the stock market will 'implode' by another 50%.

 

[forrestgump01]

you ain’t seen nuthin yet…….

Yep , all part of the plan . Just the beginning. They will eventually make it impossible for you to own a home . But they have already told you this didn't they !
You will own nothing and you will be happy .

 

[MtnCreek]

The free money is not the driving factor imho.

The fed is going to curbstomp the econ until energy consumption comes down. You'll own nothing and you'll be happy.

 

[BytorJr]

I can pretty much forget about selling some property. Maybe selling for 50% of asking price would have been smart. Retirement...never going to happen.

FUCK the NWO!!!!!!!!!!!!!

 

[Hobo Hilton]

Well, just try to separate economics and politics if you will. It’s not possible. Neither exists in a vacuum by themselves.

I agree.... Add in the third "ingredient" = Propaganda / Misinformation. There you have a snap shot of where America is at the present time... Similar to an old sailing ship with no rudder, a broken compass and a senile captain heading into the "Perfect Storm"....

 

[NoDopes]

All this money, i.e. the US Goverment debt, can't be serviced at high interest rates... It's going to implode.

 

[Lightning8]

My mortgage company sent me email today offering to refinance my current less than 3% loan so "I can tap into my equity". Sure, I will hop right onto that "deal".

 

[BytorJr]

All this money, i.e. the US Goverment debt, can't be serviced at high interest rates... It's going to implode.

That's true. At least when Volker jacked up the interest rates with Reagan, I believe I recall Reagan actually went on TV from the REAL Oval Office and gave a speach telling WE the PEOPLE WTF was going on and why this had to be done. Those years bankrupted or nearly bankrupted many people; but it was necessary to combat the inflation another F-stick brought about...James Earl Carter...peanut farmer, pretend nuclear engineer.

Maybe my history of Volker is wrong; but I know it was under his term the interest rates rose to 21.5%!!!!! We're going to see 12% IMO within the next year.

 

[lash]

Right. And my mortgage company wants me to do the same, “before rates go up”. Uhm, I’d have to be stupid or desperate to do so.

 

[NoDopes]

I believe mortgage companies also trade/sell mortgages in a trade like environment to raise money, etc. Not just those default swaps stuff.
This very low level rate mortgages are going to be harder to offload now. Combined with lower volume, I wonder how many banks/mortgage companies are going to go under. I know there has already been a couple here in Dallas on volume alone.

 

[lariat]

All this money, i.e. the US Goverment debt, can't be serviced at high interest rates... It's going to implode.

Yeah it's a bad deal in every direction. High monetary and price inflation mixed with rising interest rates is a terrible scenario.

 

[Carlos Danger]

Glad we re-financed ours into sub 3% territory when they bottomed out.

 

[ZiaHunter]

We are looking at some tough times financially with respect to interest rates and inflation. Lived through the shit show of the early 70's, Carter years and the actions the Fed took to get inflation under control Bought my first house in 1986 and the interest rate was 10.5%. Frankly I think this is going to be worse.

 

[lash]

We are looking at some tough times financially with respect to interest rates and inflation. Lived through the shit show of the early 70's, Carter years and the actions the Fed took to get inflation under control Bought my first house in 1986 and the interest rate was 10.5%. Frankly I think this is going to be worse.

Hahaha! My first house mortgage in ‘83 was 13.5% and I knew some that had even higher rates. I was happy when I was able to refinance at 10.5.

 

[E. Bryant]

Maybe my history of Volker is wrong; but I know it was under his term the interest rates rose to 21.5%!!!!! We're going to see 12% IMO within the next year.

Paul Volcker did not fuck around, and indeed he fixed the problem.

We should be headed off to about the same point to address the present level of inflation, but too many things are going to break before we get there so I have my doubts.

 

[Dan Rathernot]

wait until gas hits $10 per gallon. Brandon made a secret phone call to beg the Saudis not to cut production.....until after the election, so he could screw the Republicans. They told him NO

Biden administration asked Saudi Arabia to postpone OPEC decision by a month, Saudis say

Notably, Biden's request would have delayed the decision until after the U.S. midterm elections.

www.cnbc.com

 

[mvphilly]

I bet Bidens ebonics speaking press secretary says this is transitory too .

 

[Darayavaus]

once the housing market implodes and foreclosures begin, we'll see the remaining property owners hit with tax increases.

"by 2030 you'll own nothing......"

 

[Nik H]

you ain’t seen nuthin yet…….

 

[Alpine 338]

 

[Alpine 338]

If prices drop below pre-covid for real estate, maybe I'll be able to afford to upgrade? But then again, the money I have in the bank is becoming more worthless every day I go and buy something.

 

[Hobo Hilton]

Every recession I have experienced has very similar characteristics. Going all the way back to the gasoline / fuel shortage in the 80's... Some people or businesses get caught in the "Bear Trap"... Unfortunate timing for many. No one on this Earth can tell us what next week, next month or next year will bring. One thing for certain is this - "There are many Bear Traps in the future".. It is now appearing the recession will worsen during 2023. This is not a good time to wander around in the dark hoping to not step on a bear trap.

 

[chevy_man]

I can pretty much forget about selling some property. Maybe selling for 50% of asking price would have been smart. Retirement...never going to happen.

FUCK the NWO!!!!!!!!!!!!!

Maybe your asking price is stupid high if the best offer you got was 50%. It's not worth an arbitrary value, it's worth what someone will pay.


Why retire? Work until you're dead, it's the way of the future!

 

[EddieNFL]

About a year ago, I noticed a couple hundred acres being cleared and a sign announcing "Coming Soon - New Homes from the high 300s." By the time the first house was finished in July, that sign was gone and replaced with something to the effect of, "Family Homes for Rent." I have to believe interest rates dove this.

I've seen two house in my neighborhood up for sale in the past few months. Both were pulled from the market after 60-90 days. It's now a buyers market...if you can afford to pay back more than double the original loan.

 

[sirhrmechanic]

The folks who are really going to get killed are the ARM folks…. If you didn’t refinance to fixed rate… good luck!

Most are limited to a point or so a year increase. But still.

This also makes it very hard for people to relocate for new jobs and employment. Who is going to leave a nice 2% fixed to go to a 8 percent…

No moving on up!!! Ripple effects of this are huge.

Sirhr

 

[Hobo Hilton]

The folks who are really going to get killed are the ARM folks…. If you didn’t refinance to fixed rate… good luck!

Most are limited to a point or so a year increase. But still.

This also makes it very hard for people to relocate for new jobs and employment. Who is going to leave a nice 2% fixed to go to a 8 percent…

No moving on up!!! Ripple effects of this are huge.

Sirhr

The conditions you have described are exactly the goal of the FED Reserve. Their logic is, it will be better to have a recession than to allow inflation to continue. Unfortunately we will have both well into 2023.

 

[fpgt72]

Yes, but being upside down on home value only matters if you plan on selling. If you plan on living there for a period of time, it’s a non-issue.

If you were an investor intent on making some quick bucks and get stuck, that is on you. A blind man could see this coming.

Or you are now stuck in that house that sold for a cool $100k over what it should have, and now the value of that home is falling like a rock, and you are still making that house payment. Well you bought before the rates went real stupid, and unless you are a total idiot and did an ARM you are paying for more. Again as long as interest rates stay high people will ride that out. But when the rates start to fall people are going to default on those over priced homes and get something more "normal"

 

[Hobo Hilton]

Or you are now stuck in that house that sold for a cool $100k over what it should have, and now the value of that home is falling like a rock, and you are still making that house payment. Well you bought before the rates went real stupid, and unless you are a total idiot and did an ARM you are paying for more. Again as long as interest rates stay high people will ride that out. But when the rates start to fall people are going to default on those over priced homes and get something more "normal"

History is repeating itself.

Savings and Loan Crisis (S&L): What Happened and Aftermath

The savings and loan (S&L) crisis was a financial disaster that caused the failure of more than 1,000 U.S. savings and loans in the 1980s and 1990s.

www.investopedia.com

 

[sirhrmechanic]

History is repeating itself.

Savings and Loan Crisis (S&L): What Happened and Aftermath

The savings and loan (S&L) crisis was a financial disaster that caused the failure of more than 1,000 U.S. savings and loans in the 1980s and 1990s.

www.investopedia.com

And 2008…

Remember the “house poor” folks who bought massive homes thinking they were a sure thing? Couldn’t afford furniture or drapes or food….

They are the one who get hit first and hard!!

Sirhr

 

[lariat]

History is repeating itself.

Savings and Loan Crisis (S&L): What Happened and Aftermath

The savings and loan (S&L) crisis was a financial disaster that caused the failure of more than 1,000 U.S. savings and loans in the 1980s and 1990s.

www.investopedia.com

Nope. 2008 showed the way it is to be done from now on.

 

[Hobo Hilton]

And 2008…

Remember the “house poor” folks who bought massive homes thinking they were a sure thing? Couldn’t afford furniture or drapes or food….

They are the one who get hit first and hard!!

Sirhr

Those same people loaded what ever they needed into the trunk of their car and simply drove off into the sunset.

 

[sirhrmechanic]

Those same people loaded what ever they needed into the trunk of their car and simply drove off into the sunset.

Right. Sticking taxpayers in shareholders With the bill. And experiencing no life consequences. No wonder they expect to have their kids student loans paid back For nothing.

Apparently a signature in a handshake means nothing anymore.

 

[BullGear]

Damn. That will cool off the market...

Not in my parts of the world. We've had 6.5% for a week or more. My son is buying a house, he signed a contract last Friday and was pre-approved for a loan. He got 5.5% with a point buy down. Zillow is reporting that all of my houses are still going up in their appraisal system. People are still going through bidding wars for the houses that are on the market. My son had to outbid another person and he was told that the other person was going to outbid him by $10k but they didn't get their signed contract to the seller's agent in time.

It's still a very hot market here.

 

[vinniedelpino]

I'd rather pay 20% more for a home at 3% than buy the same home at 7%.

The folks that bought at inflated prices over the last few years still got a great deal overall if they financed. They just need to stay put.

The real losers here are our children. We're robbing them blind. Generationally speaking, we deserve to live out the twilight of our lives in the shittiest of nursing homes. Shame on us.

 

[Vodoun daVinci]

No surprise at all, we are in a recession... are we not?. My heart goes out to every individual making mortgage payment in this hard times.

Yup. New home buyers are almost back where I was in the late 1970's, early '80's with +7% mortgage rates and 20% down. What a fuck job for young folks getting started.

VooDoo

 

[7.62willdo]

Not in my parts of the world. We've had 6.5% for a week or more. My son is buying a house, he signed a contract last Friday and was pre-approved for a loan. He got 5.5% with a point buy down. Zillow is reporting that all of my houses are still going up in their appraisal system. People are still going through bidding wars for the houses that are on the market. My son had to outbid another person and he was told that the other person was going to outbid him by $10k but they didn't get their signed contract to the seller's agent in time.

It's still a very hot market here.

When interest rates hit 18% that 6.6% mortgage will look really good!

 

[MtnCreek]

Yup. New home buyers are almost back where I was in the late 1970's, early '80's with +7% mortgage rates and 20% down. What a fuck job for young folks getting started.

VooDoo

20% down and 7% on financed was normal in the the early 2000's too. The rate doubling over a short period and likely to keep going up is what's going to shock the system.

 

[BullGear]

When interest rates hit 18% that 6.6% mortgage will look really good!

Yes, in 1983 I had a co-worker buy a house and he paid 18%. I can't remember all of the details, but I believe the rates jumped big time after he sold his house but before he was able to find a house he wanted to buy.

My first house I paid 12.5% interest.