Mortgage Rates
 

It is going to get A LOT WORSE, before it starts getting better.

Today, Fannie / Freddie, 30-year fixed is 6.875%, FHA and VA about the same.


10-year Treasury is at 3.90%, up 18 basis points today.

I predict we will be over 8.000% by Thanksgiving, we will definitely see 10.000+% before rates start falling.

The increase in mortgage rates will CRUSH the housing market, it already has, and then the rest of the economy will crater.

This will get much, much worse:

1) the fed raising the discount rate every six weeks has done nothing in the past nine months except hurt the economy

2) it will do nothing quickly, long-term, 18+ months, will work, as it will cra
ter economy, but the cost to the average person will be very severe

3) unemployment numbers are UTTER BS, how many people are not being counted, what is participation rate, AND those working are not keeping up with inflation, they buy less, or they do not buy

4) GDP will continue to decrease, unemployment will skyrocket, retailers will get crushed--walmart and target will get payback for their wokeness, as their employee costs with benefits and transportation costs will put ALL STORES in the negative

5) unemployment will increase greatly as retailers shut down, most do not have the deep pockets as walmart, expect to see many store closings and bankruptcies, due to increasing costs and decreasing revenues

6) consumers, at least those not on the taxpayer teat, have already amended their spending, they only buy what they need AND eat out less--restaurants will have a much higher fail rate than retailers, fedex gave the warning shot, they are down 43% in nine months

7) not all is bad, you can get your student loans forgiven, illegals will get free housing & food & clothes & cell phones & team mexico futbol polos, and manchin's supporters will get a huge return on investment

8) and best of all, that $50+T National Debt we will have by 2025 is just a number, it will not affect your income tax, cap gains, real estate values, retirement, social security and medicare--at least depends joe said so

Sounds like a rehash of the Jimmy Carter years!

I agree with most of that...

Unemployment numbers are way off from actual numbers. Employers are slashing jobs and just not hiring.. That's gonna hurt more than anything.
I'm not sticking my neck out for any loan right now, i have 500 outstanding at most at any given time.

What I see as a plus...
Those of us that can budget and know how to save(or at least pay off stuff) will have bargains galore coming up. Pawn shops will be getting alot of business.

https://www.reuters.com/world/uk/uk-...il-2022-09-26/

https://www.bloomberg.com/news/artic...ets-in-turmoil

https://www.reuters.com/world/uk/uks...rs-2022-09-26/

https://www.ft.com/content/a549fabb-...7-7128b7b04b76



Market chaos forces UK lenders to pull mortgage products


It is falling apart as we speak

Just be glad it's not the 1980s with double-digit mortgage rates.

All transitory.

So were the 2% rates .... It's all about timing

I agree, I was not yet 18 at the time, so not much mattered other than at what store could I buy beer at without an ID check.

There are many much greater issues today vs. then:

1) the carter disaster years were 1978 - 1981, a time long ago, many things are different today

2)The economy thenwas much smaller, GDP in 1978 was $2.4T, 2021 was $24.0T, you cannot apply the same strategy and expect the same results

3) USA population in 1978 was 222m, today is it 50% more people, again, very different parameters

4) printing money and spending on BS is a big part of problem

5) Supply Chain Issue, not solved yet, may never be solved as too many profiting from it, you destory pricing when consumers have no options, they must pay more for the products they want

6) Bigger problem with Supply Chain Issue, you chose NOT TO BUY as no one likes being gored, this slows and kills economy over time

Things that can be distorted by the current socialist administration are on their last broken leg, average intellingence consumer will begin to figure out that this is with us for a minimum of 18 months, they will tighten their budgets and stopped buying all 'wants', and then the second crater will open up and swallow us whole!!

That will happen, not sure how soon.

Fannie / Freddie 30-year rates were 2.625% in DEC 2021.
Today we are at 6.875%, will be over 7.00% tomorrow, as 10-year Treasury still climbing at 3,900%, up 20 BPS today, cannot recall seeing such a huge swing in one session.

You could see 10.000+% by EOY, you could see over 12.000% before it starts falling.

Home unit sales are down, list prices are being cut by all sellers.
The new housing industry is DONE, no one except cash buyers and those relocating to another state will be looking at these.
Those in contracts will get denied by underwriting due to excessive debt-ratios due to the rising rates, many who may still qualify will walk from their deposits as they cannot budget for $1,000+/month higher payment than was estimated when they entered contract--many signed contracts that leave them open for builder liabiility if they cancel contract.
New home builders, and their subs, will get hammered, no way to stop the avalanche.

i'm glad i got Dad's house sold last year..... :hurray:

I have seen many new housing contracts in the past 24 months, a new clause added to most contracts state the builder determines the final contract price, as may increase from date of contract due to market pricing for materials and labor.

Also, I have not seen, but have been told, a buyer walking away from a contract due to their budgeting, obviously loses 100% of their earnest money / down payment, and MAY also be pursued for the differential in the contract price vs. final sales price to another party.

Democrats doing what Democrats do best.

I know there will be a dividing line just as there was in the Great Depression. Those below the line sold everything cheap to survive, those above, bought every cheap thing to expand their footprint and assets.

I only hope I am above wherever that line is. I'd like to get a nice $5,000.00 C5 :Jeff '79:

It will be soon

8.0% rates by Thanksgiving will make for a pretty bleak Christmas throughout key sectors of the economy. :(

And as bad as it portends here, the decline of the £ makes things seem rosy by comparison.

British Lenders Pull Mortgage Deals With UK Markets in Turmoil

I've never been comfortable with debt, but when we bought new cars in 2020/2021, I actually financed part of them at 1.89% & 2.09% for 60 months, figuring it would be a long time until we see money that cheap again.
Plan was to sit on cash and be ready when shit hit the fan.

Sitting on cash sucks, seeing it devalued every day. :ack:

I go back and forth over what I should be doing right now.

Mortgage - WTF is that? :dance:

I’m sitting on a big pile of cash waiting for “blood in the streets” but also stuck in miners down over 35%. Ouch!

Hard to predict what central planners will do in the future but they only have two choices, restart QE or don’t and both will result in a financial crisis of biblical proportions. Either a deflationary death spiral or hyperinflation or both.

Ludwig Von Mises pointed this out many decades ago but apparently most authorities didn’t care because they figured it would be someone else’s problem?

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

— Ludwig von Mises

Social fallout is going to be nuts.

I feel like a genius when my wife and I intentionally refinanced a 30 year with an adjustable rate that we were forced into by a family member's failure processing our previous mortgage. Old rate was on a 7/23 adjustable with a rate of 3.375%.

We switched to a 15 year at 2.675%. Being a 15 year, obviously payments per month went way up, but well within the monthly budget. On the old loan, our mortgage payment would have already increased $500-600/mo. and climbing with however many more rate hikes there are.

Bullet dodged! :hurray:

I agree and hate debt. And at my age a mortgage or car/truck payment is a frightening endeavor.

But…
When John Deere offered me 0% for 5 years I could not pass it up. And when you finance with JD they offer insurance on everything you purchase. This includes the tractor and equipment trailer and over 10K in implements.

Even the insurance is financed at 0% for the 5 years. :willy:


All insured for $1,100. For the full 5 years. Holy Crap what a bargain.

i have a shovel.....wood handle...actually 2: curved (digging) and flat (transfer).....they aren't insured, but they are locked up at night. :smash::DAB:

Bought my current house in January 2022. 3.5% Got in just as the rates started increasing. If I were to buy now, I honestly couldn't afford it. FJB!!!!

I've paid ahead on our mortgage from day 1.
Refinanced about 18 months ago @3%.
I still pay extra monthly, but less than in the past.

Part of me wishes I'd have done cash-out and finished the basement. :leaving:

Link us up sport.

Many of us made the point that her best move was take the market cash out of the trash juice house and scale down ahead of the predicable slow down.

Although I believe she is all cash, so any loss will be market equity money and not under water.

2.25% on a 15 year here. Less than a year ago. Now comes the housing crash. Then I can do an addition. :Jeff '79:

1982. I had a job offer that would relocate me back to where I was born.
I initially accepted, but turned down the offer 1 week later because
mortage rates were 16% (WTH, I was getting 14% money market rates back then).
Anyway, 1983, rates fell to ~8%, and I made the move that year.
A few years later, I had refinanced twice, down to ~5%, and that's
how I ended up on the current house until 2009.

But, really, what's a mortgage?

So far it's only increased 50K in value. That's without any of the improvements I made. Luckily, It was under valued. Lady just wanted out. :seasix:

Good job :seasix:

I was going to ask Duce how he could possibly know the details of your deal? And just because interest rates go up it doesn’t necessarily mean your home value will go down. That Duce is always such a ray of sunshine. :Jeff '79:

Yet....

Drop in price not necessarily in value.

MORTGAGE RATES, SEP 27TH:

The 10-year was still rising yesterday, finished up 22 BPS at 3.88%.
Today, rising again, at 3.95%, up 7 BPS.
Many predicted the increase, very few predicted how quickly and how high rates are today.

Today, 30-year fixed with Fannie/Freddie at 7.375%, FHA and VA about the same.

I'm so glad I was able to refinance in 2020 at 2.375% for a 30 yr. I also pay extra on principal. The house needs to be paid off before I'm 60.

I refinanced my mortgage at 2.65% the month before I retired in July 2021. I had a chance to pull money from an ESOP to pay off the mortgage or keep it invested. The ESOP has paid off very well, up 22% in the past 2 years and doing well again this year so I’ll keep it there until we have to cash out and will pay off the mortgage then. Other than that I don’t do debt and don’t plan on starting. I won’t be a slave to interest.

The 10-year Treasury Yields sits at 3.98%, the last time it was 4.00%, or higher, was 2010.

While not a 1:1 correlation with mortgage rate, it is a good barometer, and a big influencer.

Many will agree the treasury yields increase due to a lesser confidence in the US GOV vs. alternative investments, which cannot offset the higher returns offers to treasury buyers.

Many current investors that exit the equities will not purchase treasuries, as not their strategy, the will sit on cash until they feel there are new opportunities in the equity markets.

Failure to sell debt will result in offering higher yields, which will affect all consumer debt rates.

I am curious what you think of this: I bought a new home last august, right at top of the market. Only took a smallish mortgage though. I also refi'd home two to a 20 year note on a jumbo. both at 2.75%. Now, I am sitting on debt totaling low seven figures at 2.75%.

You're screwed.

Why? all you know are the details I posted. How, EXACTLY am I screwed?

Buying at the top of the market, with mortgage rates now rising to Carter levels. What do you think is going to happen to the value of the home that you just bought?

Why is it assumed that rising interest rates devalue ones home?

Because most buyers, wisely, buy as much as they can afford.

I didn't. I bought my house in the Piedmont 26 years ago, after it had been on the market for 18 months and the owners then desperate to sell it. I payed almost $50k less than they had been asking. Sold it two months ago with the market at its peak.

My current home I built in 2005 when the market in this resort area was down. Two years later my house was worth twice what I had in it- condos up the street being bought for stupid money. Then the 2008 crash and most of them were underwater.

Funny....Out of the last 3 houses I purchased, two were purchased at the bottom of the market....the Bay Area house in the slump of '97, and the big house in Fresno in the depression of 2011.
I got the house in Fresno because the people who bought it in '06 on a Jumbo loan with an adjustable mtg. defaulted.
I paid less than 50% their price for the home. And it has tripled in value in ten years.

I have always bought property when the 'window of opportunity' opened and I was in the market and had the means. It's never not worked out.
I almost bought 3 more rentals in 2011 because it was easy money but let it pass because I didn't need the $$$ or headaches going into my 50's.

Egah is a baller and has no real worries anyway.

I believe I get your point. :seasix:

But I’d add, many (most?) buy more than they can afford. I have consulted many that just because you can qualify for a mortgage doesn’t necessarily mean that you can “afford” the home.

The home I bought in January this year is worth 30% more than I paid. And interest rates have doubled since then.

A lot of that depends on three factors:
1. Job security;
2. Ability to DIY maintenance and repairs;
3. Management of entertainment budget.

you make dumb assumptions. true, I bought near the top of the market. I had another home which I sold at the top of the market, so gains moved across laterally. homes go up, they go down, at the end of a day, its the cost difference which matters. only first time buyers are in tough shape buying at the top.
next up, I took the cash out and stuck it in an online savings account currently earning 2%, so my net cost of borrowing (not factoring tax ramifications or other) is .75%. that will go lower as rates go up. where the fk can you borrow money at .75%

on house two, its current value is mid 2 millions. if I chose to do so it would rent for >125,000 per summer season. the carrying cost is a mere 4200 per month.

none of this factors my ability to earn, my savings, or demand in the areas I own which could give me a fairly easy exit.

just because you and el douche bag think its a bad idea doesnt make it so.

Yet you failed to answer my simple question.

We can always count on you for positive and insightful posts.
What a joy and blessing you must be to your family and friends and community.

Ill Dunce is a troll. That's why he's had so many names. Gets banned comes back in six month acts like an ass gets banned comes back in six month with another name gets banned comes back with another name. He has no family or friends they all got executed in Hungary. :yesnod:

Lighten up, Francis. He just doesn't like Real Turds. :Jeff '79:

The value of a home is irrelevant until decided to buy/sell. Regardless, let's discuss.

My beach home was purchased during the last downturn when no one was buying. I got it a discount for 1.1 million. Its now valued well over 2 million, approaching 3. EVEN if there is a pull back, with a mortgage of 500k, how exactly am I screwed?

My primary was purchased using funds from my previous home. I also bought it slightly under current market (about 60k under). Even if it were to pull back to 2014 pricing, it would still trade at something like 750-850k. Any losses I would incur, would be paper losses from the paper gains on the previous home. In short, it would wash out, meaning technically, I would have sold the previous home at a lower price as well.

In either case, I am well ahead, as I have places to live, accrued value, and on the other side a million bucks on the sidelines from previous sale, earning 2% interest, defrayign the carrying cost of the current mortgages.

please, tell me how I am screwed......

Unless your local government levies taxes on your real property - then the value is extremely revelant. ;)

Previously you wrote:

Now the story is changed:

:waiting:

I'm doing OK here in a fiscally responsible county and village. My tax valuation only increased slightly. Meanwhile the market values have gone through the roof.

This is insane, I just got an email from my bank I use for checking and this was their latest "offer" for a HELOC

All HELOCs are variable rates, as the usage of the line is usually for ten years--it is impossible to charge a fixed rate under 10.000% to hedge against future draws on the line.

The interest rate they are marketing probably includes an initial teaser rate, at Prime Rate, or even below Prime, for the first year or two, and after that period the index will remain Prime, but the margin, the amount added to Prime to get the actual rate, will increase.

I see these daily, if you want a HELOC, a good rate would be Prime and no higher than Prime plus 1.00%.

Today, Prime is 6.250%, BUT remember, every HELOC I have seen in 30+ years has no annual rate increase limitations, it can go up 5.00% in a given year, AND most HELOCs are capped at 18.000% rate, seen very few lower than that.

I have never paid more than (Prime - 1) on a heloc, which usually puts me at 1-2%, and I have always paid if off in less than 12 months. Just shocks me the rate these interest rates are growing.

Guessing it is time to shift money around again to take advantage of these interest rates.

Try living in Illinois sometime. The formula they use to calculate your property taxes is so clever your taxes can go up even though the value of your house went down. :lol:

I got this in an email this week.

So I can refinance from my 3.0% mortgage and extend the term out to a new 30 year loan at 6.24% and "save" $379/mo.
Brilliant!!

I don't think I am the ideal target of their marketing.

I lived in New York State for 11 years and saw similar games. My local Town Super had the gall to tell me "We've never raised taxes." They just played with the valuation to bleed as much as they wanted out of us.

The year I left they raised the fee on my professional license by about 300%. Their stated reason was to raise more revenue for unrelated programs from those with "privilege".

Also around that same time was the Thruway Authority bullshit. Originally sold as a 30 year program, at the end would give the state with new bridges and pavement. In year 29 the Legislature decided to keep the tolls, in fact increased them dramatically, again with the stated reason that it was a good stream of revenue. Rural drivers then got to subsidize ferries to NYC.

You'll always do OK because YADKIN.:seasix:

25 years ago I headed south to visit a cyber friend here in Jax Fl. and even though that relationship did not flower, my love of the climate certainly DID, vs Wash DC burb and 4' of snow in my driveway with wind howling 90 mph.....

Floriduh has no state income tax.....7% sales tax, and my property tax is only 600/yr.....on a house pushing 300k in value now.....

I got VERY lucky in that I moved just outside of Jax....into Clay Co. Orange Park where the cost of living is much lower than in Jax the city.....

Absolutely, it's essential to keep an eye on the economic landscape, especially with significant fluctuations in mortgage rates. The impact on the housing market and consumer spending can be profound.

:skep:

STFU and go away spammer.

Is this gedeon??

No, geo would never agree with anyone for any reason

Or use any punctuation.

As a buyer in waiting I have been waiting for the bottom to fall out.

You can lower your interest rate later, but you can't make the house cheaper later on.

If you can afford it, you can pay whatever effective rate you want. I got in before it really fell out, 4.05 percent and was being offered 3 with a million hoops(self employed), or I could just pay $240 more a month and end up with the same effective rate as 3 percent.

I will never forget during the last crash, it wasn't this house(or maybe it was), but it was close by and similar in size. I drove by it everyday on the way home.

https://www.google.com/maps/@42.5833...8192?entry=ttu

On the market for $350k in one of the primest markets in Michigan.

Worth 2.4M today, I'd pay 15 percent to snag a deal like that again.

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Only if you get an adjustable rate. That would ARM-a-gedeon

Not, it's not. Last sold a year and a half ago for $655,000. A far cry from 2.4M.

Look at the address on the mailbox.

Google has it wrong.

https://www.zillow.com/homedetails/3...24492489_zpid/

The house that sold for that price looks like it hasn't been touched since it was built in the 60s.

I'm paying 2.25% on a 15 year note. In essence, because of Bidenomics, the bank is paying me.

My first mortgage, in 1975, was at 8.5%.

Cry me a river with your 6-7% rates. THOSE ARE NORMAL. :rofl:

OK, the house at 3805 last sold for $1.99m.

Mine was 1988 at 11 7/8%. Thank you, Jimmy Carter.

I'm happy to be under 6, I guess. Fighting the urge to pay it off too quickly because money does grow faster in the market.

It took me about ten years paying a financial advisor before I finally understood that a mortgage was not a bad debt to have. Especially now, with the collapse of the dollar imminent. :yesnod:

Pre-paying a mortgage is essentially risk-free.

Compared to the stock market? :eek:

Sure, a 30 year outlook on the stock market isn't as scary as a shorter time window like election year activity.

:island14:

Nigerian prince :rofl:


https://nass.gov.ng/themes/newnass/images/mps/468.jpg

Pre-paying a mortgage has nothing to do with elections, politics, wars, what-have-you. It's a guaranteed return.

The point is, the free ride is over! We’ve been living large for the last several years, but if you didn’t see this on the horizon you’re blind. Rates had no where to go but up….

Buying property, the money is made on the “BUY”. Period.

The intelligent man, reduced their debt in the last say two years. Now sitting pretty.

People will still take out mortgages no matter the rates…..

And I thought you all were ballers that paid cash for everything…….

^ Smart man! :hurray:

I haven't had a mortgage in over 20 years. Late '90s I think. :eek:

“The reports of my death are greatly exaggerated.”

Fed is still QT and hasn’t pivoted. Dollar looking strong, relative other currencies.

https://www.marketwatch.com/investing/index/dxy

:cert: Good work.

Same for me. Moved into my new built home in 2004 with no encumbrances. All worked out good I sold my old home(that had no mortgage) and built the lake house.

No mortgage here either, 20 years~. Sleeping soundly and investing the cash flow on vacations.

I could have easily paid off my mortgage, but instead I refinanced when the rate bottomed out. That money that I did not spend is making three times that in the market.

Market is floating on a sea of debt and debtors. Maybe it goes on forever or maybe not? Lot’s of counterparty risk, more than I care for, not worth risking my home on. I still dca, though and Gold.

For all the mortgage free people, have you ever taken out a heloc? Still counts