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Mortgage Rates Are at the Highest Level Since Before Covid-19 Hit

Housing is about to stumble and it won't stop there. Liquidity is drying up on multiple fronts simultaneously.
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Mortgage rate data from St. Louis Fed, chart by Mish

Mortgage rate data from St. Louis Fed, chart by Mish

Mortgage Rates - Weekly Ending Thursday Since 2007   

Mortgage rate data from St. Louis Fed, chart by Mish

Mortgage rate data from St. Louis Fed, chart by Mish

Mortgage rates are inching higher and higher. The chart numbers are as of last Thursday.    

Current Rates From Bankrate.com

  • "On Monday, January 31, 2022, the national average 30-year fixed mortgage APR is 3.780%."
  • "The average 15-year fixed mortgage APR is 3.280%, according to Bankrate’s latest survey of the nation’s largest mortgage lenders."

Huge Jumps

  • From 2.65% to 3.78% on 30-year rates 
  • From 2.10% to 3.28% on 15-year rates

Rates are still low historically, but home prices sure aren't. 

Home Prices Jump Another Percent

Case-Shiller Home Prices from Case-Shiller via St. Louis Fed, Chart by Mish

Case-Shiller Home Prices from Case-Shiller via St. Louis Fed, Chart by Mish

For details please see Home Prices Jump Another Percent, Fed Extremely Behind the Inflation Curve.

Fed Support 

The Fed has encouraged housing speculation by keeping interest rates low. Half of its monthly QE asset purchases have been mortgage-backed securities.

That support ends in February or early March.

What Can Go Wrong?

  1. The Fed is hiking
  2. Stimulus has worn out
  3. The stock market is stumbling
  4. Pending Homes Sales Unexpectedly Decline 
  5. Merchants are stockpiling and pre-ordering everything
  6. Retail sales are falling.
  7. Major deceleration in deficit spending.
  8. Declining working age population will reduce productivity.

Refinancing Liquidity

Low rates also put money into people's pockets via refinancing at a lower rate. We also had cash out refis. 

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That liquidity support ended as well. Anyone who could have profited by refinancing has already done so. 

It would take new lower rates for another refi boom to happen.

Pending Homes Sales Unexpectedly Decline 3.8 Percent in December

Add it all up and the overall liquidity drain is massive. Housing rates to cool and there are signs of that already. 

For discussion, please see Pending Homes Sales Unexpectedly Decline 3.8 Percent in December.    

The Huge Stock Market Bubble Just Popped and the Fed Can't Rescue It

ARK Innovation ETF 2022-01-25

The stock market and related euphoria also supported housing. 17 percent of recent purchases were made by people who already owned a home. 

Also consider The Huge Stock Market Bubble Just Popped and the Fed Can't Rescue It

The stock market highs supported all kinds of purchases, including autos, travel, dining, and real estate. 

With Nearly Everyone Looking the Other Way, It's Time to Discuss Recession

Liquidity is drying up on multiple fronts simultaneously. 

That is why With Nearly Everyone Looking the Other Way, It's Time to Discuss Recession.

This post originally appeared at MishTalk.Com

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