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Certainly not "most" in the sense of more than 50%, or anything close to that. There are lots of homeowners with no mortgage, and lots of homeowners who bought 10-20 years ago and never extracted equity. Very few of those people would be in any trouble.
It's the people who bought in the past few years using 30-year mortgages at 3% who might be at risk. If their rate jumped to 7.5% their P&I increases by 2/3. What percentage of homeowners are in this camp? I really don't know, but IMO most of them would be under serious financial pressure.
With all that said, it doesn't take a huge percentage to cause trouble. During the financial panic the percentage of mortgages in 90+ days of delinquency peaked at about 5%. So that was probably about 3% of all homeowners.
Fixed-rate mortgages account for over 90% of all mortgages.
Yes, I understand.
Phil and I are having a side chat about the wisdom of offering mortgages with a rate that is fixed for such a long period of time. This can create distortions in the market... for example someone who might otherwise move to a different state for a better job may well decline such an advancement merely because mortgage rates have increased.
I mean the jist of it is the current level of home prices is way above a where they should be and without some sort of mechanism to bring down spending and prices, we just sit with high rates / inflation, protecting the lucky ones that locked in early.
Sure, such a large increase in mortgage rates in two years or so has created a strange market. I'm not suggesting the U.S. approach is better (or worse) than Canada's. Each one has positives and negatives.
Phil and I are having a side chat about the wisdom of offering mortgages with a rate that is fixed for such a long period of time. This can create distortions in the market... for example someone who might otherwise move to a different state for a better job may well decline such an advancement merely because mortgage rates have increased.
Why wouldn't you offer fixed rate mortgage? It's a financial product. The buyer can chose fixed or floating. The buyer can chose to pay in cash. The buyer can chose a 15 year loan, 20 year loan, or 30 year loan. Options are a good thing and give people with different needs different choices.
Phil and I are having a side chat about the wisdom of offering mortgages with a rate that is fixed for such a long period of time. This can create distortions in the market... for example someone who might otherwise move to a different state for a better job may well decline such an advancement merely because mortgage rates have increased.
Phil and I are having a side chat about the wisdom of offering mortgages with a rate that is fixed for such a long period of time. This can create distortions in the market... for example someone who might otherwise move to a different state for a better job may well decline such an advancement merely because mortgage rates have increased.
That would be short sighted on the person's outlook.
2-3% rates were an anomaly. 7-8% historically has been more normal.
I recently moved after having a paid off house, so not thrilled about a 7.25% mortgage but the house I bought has already gone up $350,000 in 6 months (neighbor closed yesterday). So if I was to sell now, do I care about the interest rate?
Had I stayed in my former home it would not have gone up in value, actually might have dipped a few thousand.
That would be short sighted on the person's outlook.
2-3% rates were an anomaly. 7-8% historically has been more normal.
I recently moved after having a paid off house, so not thrilled about a 7.25% mortgage but the house I bought has already gone up $350,000 in 6 months (neighbor closed yesterday). So if I was to sell now, do I care about the interest rate?
Had I stayed in my former home it would not have gone up in value, actually might have dipped a few thousand.
I don't think its a stretch to say that if your statement about your home going up $350,000 in value in 6 months is true (and the purchase price of your home was less than $1 billion), that is the sign of a genuinely out of control housing market fueled mostly by the "greater fool theory". Congrats on your remarkable gain.
That would be short sighted on the person's outlook.
2-3% rates were an anomaly. 7-8% historically has been more normal.
I recently moved after having a paid off house, so not thrilled about a 7.25% mortgage but the house I bought has already gone up $350,000 in 6 months (neighbor closed yesterday). So if I was to sell now, do I care about the interest rate?
Had I stayed in my former home it would not have gone up in value, actually might have dipped a few thousand.
What was your sale price? To go up 350k in 6 months it had to be well over $1M.
I don't think its a stretch to say that if your statement about your home going up $350,000 in value in 6 months is true (and the purchase price of your home was less than $1 billion), that is the sign of a genuinely out of control housing market fueled mostly by the "greater fool theory". Congrats on your remarkable gain.
In other words, a PONZI scheme.
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