The average 30-year mortgage rate topped 5% on Friday to a Fresh 7-Year High.
> Mortgage rates had a bad week and an especially bad day following a much stronger-than-expected jobs report.
> Mortgage rates were already operating fairly close to long-term highs, but today’s move easily took them to new highs. The average lender is now quoting conventional 30yr fixed rates of 5% for relatively ideal scenarios.
> Those without a big down payment or without perfect credit/income can expect to see even higher rates. Most lenders ended up recalling the morning’s initial rate sheets and reissuing higher rates at least once today.
> There’s really no silver lining apart from the fact that the higher rates go, and the quicker they get there, the closer we get to the point that the economy slows down as a result. When that happens, rates will begin to fall before just about anything else. Unfortunately, the expected time frame for such things is incredibly wide (not the sort of thing you hope for if you need to buy/refi). And yes… it’s also unfortunate that our one source of solace at the moment involves an economic downturn, but if you want low interest rates, that tends to come with the territory.
Many recessions start out as a housing bust. Another one may be in the works.
Mike “Mish” Shedlock
Mortgage rates never fell below 6.5% in the 1990s and were over 8% for all of the 1980s
True, but housing was a lot more affordable then.
The two things are closely tied. Houses were much more affordable BECAUSE interest rates were higher. There are other factors, but it’s mostly that.
Volcker did make an early attempt to keep monetary policy reasonable and functional, despite Nixon having abandoned the last vestige of checks and balances making doing so at all possible.
But slowly and surely, as is inevitable when the last restriction on crass theft is gone, theft by printing took over. Until now, when such theft is all that’s left of what was once America. With little more than the last remains of a ruin remaining, of anything resembling a productive economy.
Well the NYC metro area and all of Eastern Massachusetts is booming. No matter where mortgage rates end up the Outlook has never been better for both areas. Rents, and housing prices are still soaring. $2000 a month is the starting rent for a tiny studio apartment in the outer boroughs of NYC or in eastern Massachusetts at least 25 miles outside Boston. $3,000 is the entry point in Boston and rents in Manhattan are $4000 a month and up. Realtors have waiting lists of prospective buyers , most listings are on the market for literally a few hours. Selling prices are 110% of asking price
For a home buyer to make the same payment as when mortgage rates were near their lows of 3.5%, they would have to buy 12% less house. Or a seller would have to accept an offer 12% lower. So prices are going to come down one way or another.
Good luck with that. Sellers are getting 110% of asking price in Massachusetts and 150% in the NYC metro area suburbs
State your source. Bloomberg sees it differently.
Give it a few more months. That kind of out-of-sync with the rest of the economy euphoria always ends the exact same way.
Yes, Cecil1, God forbid housing might begin moving in the direction of affordability! The calamity!
I love how Trump is vocal about wanting the Fed to lower rates. If they do it, then it looks like they are catering to him. So, instead they’ll keep raising the rates and if/when the economy crashes or slows, Trump gets to say “See, I told you so!” Serves the pricks at the Fed right for putting themselves in this position.
Trump isn’t really serious about his “criticism” of the Fed’s rate hikes… what he is really doing is calling them (the Fed) out on hiking rates ahead of an election for obvious political purposes… DT is simply letting the Fed know that he knows that they are 100% political & he’s willing to call them out when he has to… message delivered.
Trump is very hated in the DC metro area. Every government and quasi government organization wants him out.
A housing bust??
You mean when houses are actually even a little affordable???
That’s somethinf to welcome
Yep.
A good, long housing bust is exactly what this country needs.