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I never thought I'd see mortgage rates at 6% in my lifetime I just wonder why its so much higher than long bond yields and the FED funds rate..
Haha. That's youth talking. By the time they got down to 6% we'd probably had 3 or 4 mortgages, at rates all the way up to 11.5% and all the way down, but never as low as 6%. We were cash buyers after that and could afford to ignore the rates. People today don't realize how lucky they are. The rates could head right back on up.
Hard to say. The stock market is so far in the crapper, it's already priced in a recession. We'll know in a few hours.
Is it really down that far? The Dow is still up 18% over the last 2 years.
We're still above the pre-pandemic high, which was nearing the end of the growth cycle. We're still at the end of the growth cycle, but now we have tens of trillions of dollars floating around in the system that were created for pandemic relief. That's going to come back and crush us.
It's worth remembering despite high interest rates house prices didn't collapse. If anything, house prices steadily went up in the 70s, I believe, due to rampant inflation.
6% is a long way from 18% so 6-10% mortgage rates are unlikely to cripple house prices if we also have ongoing inflation.
I imagine there will be many regional factors affecting local house prices too. If mortgage rates shoot up, many people just won't move and trade up, which keeps inventory tight, especially in desirable areas. Unlike in 2008, the current crop of homeowners are more able to afford their properties due to stringent mortgage practices and loan standards. The 2008-2009 crash was fueled by the subprime mortgages and loose lending standards.
It's not, they just don't want to jack things all at once. Projects for increases this year typically range from 5-7 times.
We're going to be back to 7% mortgages or higher.
My first mortgage in 1995 was over 9%.
My second in 2000ish was 7.5% and then rapidly fell in the years after that.
This is going to *CRUSH* the housing market especially if combined with a recession.
I'll be buying when that crater happens.
7% was considered a very, very good mortgage rate for much of my working years. Then again, tract homes were not priced at $300 per square foot either. Affordability is both price and rate. 6% is a healthy rate if prices fall back to earth.
The fed is on the wrong path with these rate increases and is going to do great damage to the world economy. The inflation problem is rooted in supply chain issues. Interest hikes presumably are aimed at reducing demand, but they will also stifle investment needed to fix the supply problems in face of rising global consumerism and demand. The real problem is supply sided, not demand.
Is it really down that far? The Dow is still up 18% over the last 2 years.
We're still above the pre-pandemic high, which was nearing the end of the growth cycle. We're still at the end of the growth cycle, but now we have tens of trillions of dollars floating around in the system that were created for pandemic relief. That's going to come back and crush us.
Sloppy Joe demanded we keep printing money. What could possibly go wrong?
You missed the point - they would have to be about 13 for mortgages to not hit 6% in their lifetime - said nothing about being aware of it. The point also is that while rates have been low for a while - it hasn't been that long since they were at these rates - most mortgages last longer with 15 to 30 year terms. You are also ignoring that pretty much all 13 year olds are aware of price increases on candy and the like - it is not just beer increasing prices, everything is.
I was certainly aware what was going on when I was in my teens and getting high interest in accounts and seeing big increases in wages and prices and most certainly in my early 20s when paying on a 17.5% mortgage - paid it off in like 3 years.
Ok, fair enough.
I think the key point here is that many buy homes on payment and the increasing interest rates will make homes cheaper in price but it may be the same monthly payment.
Frankly, the housing market won't really shake loose fully until the recession rolls in and people HAVE to sell and are underwater, then starts the flood.
I have this sense that a short recession will be necessary to rein in this inflation, which is being significantly driven by extrinsic factors that are out of our control. Hopefully the Fed can get this right. Wall Street has probably already factored in the rate increase.
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