Mortgage rates hit 6%, first time since 2008 housing crash

[BumRushDaShow]

Source: AP

WASHINGTON (AP) — Average long-term U.S. mortgage rates climbed over 6% this week for the first time since the housing crash of 2008, threatening to sideline even more homebuyers from a rapidly cooling housing market.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 6.02% from 5.89% last week. The long-term average rate has more than doubled since a year ago and is the highest it’s been since November of 2008, just after the housing market collapse triggered the Great Recession. One year ago, the rate stood at 2.86%.

Rising interest rates — in part a result of the Federal Reserve’s aggressive push to tamp down inflation — have cooled off a housing market that has been hot for years. Many potential home buyers are getting pushed out of the market as the higher rates have added hundreds of dollars to monthly mortgage payments. Sales of existing homes in the U.S. have fallen for six straight months, according to the National Association of Realtors.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, rose to 5.21% from 5.16% last week. Last year at this time the rate was 2.19%. Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasurys.

Read more: https://apnews.com/article/inflation-mortgages-mortgage-rates-90d3b63fe4dd8b81d6765375d403cb8e

[mitch96]

1. I guess when the rates go up, less people can afford to buy a house. Less demand, more supply

housing prices go down. Yes? Or is this too simplistic...
m

[Happy Hoosier]

5. I doubt housing prices will fall much unless there is a total crash....

As in 2008. But the idea is to arrest price increases. We'll see though. Frankly, a 5-6% rate is reall where this should be for normal operations. If the rate is always low, there is very little room for Fed Stimulus other than pumping up the money supply.

[melm00se]

7. Housing prices

correlate with mortgage interest rates, real property taxes and property insurance rates.

I seem to remember seeing an article that basically said that p&i + tax escrow + insurance escrow (IOW your all in payment amount) doesn't really vary that much for similar sized houses but the sale price varies (of course there are outlier markets but markets right in the middle see this).

[BadGimp]

15. All the investment greoups have cash so they like a drop in prices and can add more inventory...

...for less.

The American Dream of Home Ownership has been financialized to the point where most Americans can not afford to buy a house. The same thing that happened to Higher Education.

[Crowman2009]

2. The mortgage rates won't make a bit of difference to the personal home buyers.

Seeing how these properties are already way overpriced to the point of unaffordability to the average person. My only hope is that these real-estate investment firms lose all their money, along with the crypto/NFT pricks.

[BumRushDaShow]

3. I read some articles I think yesterday

talking about the "cooling of the housing market" and I think everyone knows it is way overpriced - often with nothing but flippers doing one little upgrade, jacking the price up, and then selling to another flipper. Wash. Rinse. Repeat.

In some cases, you have foreign multimillionaire speculators buying up and flipping multiple tracts of houses to try to grab a quick profit.

If anything, that whole house-flipping thing needs to be regulated IN FULL because you end up with streets with no people living in the houses because flippers price them out and can only dump the houses by flipping them to another (albeit naive) flipper.

It's like a pyramid scheme and in this environment, those last ones in holding these properties are going to have to take a loss to get the house sold.

[oldsoftie]

8. HGTV has ruined the real estate after market. Period.

[BumRushDaShow]

12. You could possibly go back to PBS

and "This Old House".

[oldsoftie]

16. At least they taught you how to do stuff!

Most of these "flip this house" shows are phony as hell. And they're almost always set in some city where they buy a 3/2 DUMP, pay 650k % "profit" 196K

[BumRushDaShow]

17. Agree - the house flipping shows have become cringe-worthy

I used to watch HGTV a lot years ago but over time they had less and less "G" (garden) and too much "H" (home).

I can't remember the last time I turned it on.

[Happy Hoosier]

6. It isn't outrageous everywhere.

Prices where I live ar estill pretty reasonable. The issue here is that educated professionals don't want to move in to an ass-backwards state like Indiana.

[WhiteTara]

4. I'm so grateful that we refi-ed early this year when rates were reasonable.

[oldsoftie]

11. Historically these current rates are still a good deal. We're just not used to seeing it.

We've become used to cheap money. I know a couple folks who locked in 2.5%. Thats just crazy.
People under 40 think 5% is horrible. My parents bought a house in 1967 for 5% interest.
Rates should have been back to 5ish YEARS ago.

[Novara]

14. I re-fi'd and am paying the same monthly payment but paying off my house 10 years earlier

I went down to a 2.8% rate. I was sooooo lucky (I am not smart enough to have planned the timing so well).

[oldsoftie]

9. The Fed needs to cool it after this next hike. And this one better NOT be a full point.

They were too slow to start & now they're rushing to catch up. Both are mistakes.
Let the market adjust for a couple months & THEN make a decision if it warrants another raise

[yaesu]

10. The Feds goal at destroying the economy is on track. nt

[progree]

13. The problem: The median house price was 3x median income in the 80s, it's close to 7x now

https://www.democraticunderground.com/100216658196#post8

The mortgage payment is essentially the interest rate X the house price (yes I know its a bit more than that to pay down the principal over 30 years or whatever the term is, and yes I know the formula). Am tired of some people bragging about how super-high mortgage rates were in the 80's and how horribly tough their lives were, and how people have it so easy now. They leave out the house price part of it.

I am a boomer and bought my house in June 1980, so I know what high mortgage rates are. Yes, it was hard, but not impossible -- house prices were about 1/5 of what they are now.

Also not many people were paying the sky-high interest rates some people cite. I bought a house in June 1980. About 2/3 of it was financed at 9% (I assumed a mortgage) and the rest at 12%. While that combination (10.0%) is almost double today's rates; like the title says, house prices were less than 1/2 what they are now when expressed in terms of median income.

As for higher mortgage rates that some say are good for us -- they don't help anyone except the bank. They slow down the price increase (so far), maybe lower prices in some areas, but when you multiply the mortgage rate by the house price (or better yet, use the proper formula), the mortgage payment is a higher number than before. That is not helping the buyer. And it sure the heck isn't helping the seller. Just the bank. Tell me the mortgage payment is coming down and I will start cheering. Ecstatically.

[nowforever]

18. So inflation will be quelled by raising the price of everything

The current worldwide inflation issues are almost entirely driven by a pandemic that has disrupted demand and supply for the past 21/2 years. These demand and supply issues will naturally adjust as economies return to normal activity. The Ukrainian War is now making that more difficult. Destroying demand by raising the cost of everything is the Feds solution to inflation. Their logic is once you crush demand it will force the price of goods and services to fall because...nobody has any money so we have to make things cheaper so they'll spend what little they have. The best solution is to allow the normal up and down, in the cost of things, to occur without outside meddling (Fed raising rates). The Feds interference is more than counterproductive its destructive.

[JohnSJ]

19. I remember when a reasonable interest rate for mortgages was 9%, and houses were 100K

[honest.abe]

20. So this makes it even more impossible to buy a home for the non-uber wealthy.

I think many will just give up. Damn shame because I personally feel the Feds raising interest rates is the wrong approach.