Mortgage rates surge to the highest point since 2008

[mahatmakanejeeves]

Source: Yahoo! Money

Yahoo Money

Mortgage rates surge to the highest point since 2008

Ronda Lee
Thu, June 16, 2022, 10:00 AM

Mortgage rates this week jumped by the largest amount in 35 years, making home-buying significantly more unaffordable in just seven days.

The rate on the 30-year fixed rate mortgage surged to 5.78% from 5.23% last week, according to Freddie Mac, marking the biggest one-week increase since 1987 and hitting the highest level since November 2008. The average rate is more than two and a half points higher since just the start of the year.

Rapidly increasing mortgage rates have become the biggest hurdle homebuyers face in addition low inventory levels and double-digit price gains, pricing many out of the market altogether.

“Climbing mortgage rates continue to put pressure on the housing market, pushing the cost of homeownership ever higher,” Hannah Jones, economic data analyst at Realtor.com, said in a statement. “There has been little relief for American consumers at the grocery store, the pump, and in both the for-sale and rental markets."

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Read more: https://finance.yahoo.com/news/mortgage-rates-surge-140025821.html

[twodogsbarking]

1. Mortgage rates are the lowest they will be for many years.

Maybe.

[progree]

2. And it's about 65% more expensive to finance 80% of the median priced U.S. home now than a year ago

For instance, the median list price for a home in the U.S. was $447,000 in May, up 18% since May 2021. That means it's about 65% more expensive to finance 80% of the median priced U.S. home now than a year ago. That translates to paying an extra $820 a month, according to Realtor.com.

That's $9,840 more per year.

[INdemo]

5. Is there Price Gouging in the Mortgage Industry?

How can the Fed raising the rate 3/4 per cent cause the industry to convert back to the 1970"s rates? It is just another scheme to tack on to consumers to make it seem as if this was all Bidens fault. Remember who runs/owns the major lending institutions ? The fucking Republicans....

[melm00se]

6. Mortgages

The Fed's interest rate that they raise (and lower) is a short term interest rate. This rate, due to the loan's short term, does not directly impact mortgage rates.

This article sums up how mortgage interest rates are established quite nicely.

[former9thward]

21. We are not at 1970s numbers.

Mortgages got up to the 16-17% range then. We are far from that.

[OnlinePoker]

3. All those who took out variable rate mortgages are going to be hurting

Same for those who locked in at a low rate a few years ago but are coming up for renewal. Housing crisis 2.0 on the way.

[elias7]

4. Expected I believe when low unemployment and high inflation

I remember a little macro

[getagrip_already]

7. When I first started house-hunting, rates were over 17%.....

That isn't a typo. It was back in the early 80's under ronnie raygun.

People were still buying houses.

[mnhtnbb]

10. I bought a townhouse in Woodland Hills, CA

with a 16% 30 year mortgage in the early '80's. Bought my current house-- which is part of a new development-- with a 2.3% 15 year mortgage in Dec 2020. I'm hoping to have it paid off by 2030, if I live that long. Not going anywhere else!

[Gidney N Cloyd]

11. Rates had dropped to around half that when I first bought in the late 90s.

Word then was that anything much under 10% was historically low-- and the market was on fire.

[h2ebits]

13. That's correct. . . .

I bought a house in 1982 and at 18% interest with what was called a 3-2-1 buydown. I made one house payment and then moved to refinance to a 30-yr 12% interest rate. As the years went by, I refinanced down to 9% and finally a 15-yr mortgage at 7%, which I paid off early.

People will continue to buy houses.

[Bengus81]

15. Bought a new home in Oct 1981,mortage rates were 16%+. We got a bond loan for 12.5%

Ended up doing re-fi three times in the 25 years it took to pay it off. With a low rate we could have paid it off in 15-17.

[TexasBushwhacker]

23. Most people went for ARMs then

Then interest rates and home prices started to drop in the mid 80s. People who wanted refinance couldn't because they were underwater on their mortgages. So they walked. There were massive numbers of foreclosures. I bought a house in 1986 for 35% less than it sold for new 2 years before. That could happen again. It will be a big opportunity for people who were priced out, but they'll be competing with the cash buyers wanting to pick up cheap rental properties. If you were thinking of selling, you'd better do it before this happens. The house I bought didn't get vaack to its original selling price for 9 years.

[SKKY]

8. So glad we got our house in 2019. Not sure we would take the plunge today.

[Calista241]

9. I bought my first house at the end of 2008, and had a 6.25% mortgage rate.

Which I thought was amazingly low at the time. I refied with the same term when rates went to 3%ish. I suspect rates below 5% won't be around again for a long time, if ever.

I think Tiny Houses, and maybe slightly larger small houses, are the housing market of the future.

[TexasBushwhacker]

24. There are plenty of people who would be happy to buy smaller homes

Think of all the baby boomers who would like to downsize. The thing is, builders don't want to build them because there isn't enough profit in it for them and banks don't like to write small mortgages for the same reason.

[beaglelover]

12. Glad I refied last year at 2.5% fixed.

[pnwmom]

14. To put this into context, our first mortgage was 10.75.

And I knew people in other years who paid even more.

[Deminpenn]

18. 13%

circa 1981. Sure found out what being "house poor" meant.

[Bengus81]

16. The Fed claimed the first increase would slow the economy,then the second,then the third....

BS,all it does it make their banker buddies BILLIONS more in interest from those who can least afford it.

[Igel]

17. It's not like tapping the breaks on a small car.

It's more an estimate, based on theory--and even then, it's a gradual slow down.

It takes a while for the rates to propagate through the system. Then it takes a while for consumers and businessfolk to notice the rates are up. It's faster for consumers--we get a credit card bill or two and we notice, but that's anywhere from 32 to 58 days after the rates go up on a given card. Depends how soon after the increase the bill's mailed out and how soon before it's due the consumer looks at the details--and some may not even notice.

With businesses it's longer, because not everybody business is in the market for a loan every month.

This fights the usual habit during periods of high inflation--you have $20 today and want to wait a month before spending it, it's worth $19.20. It depreciated. So you learn to spend the money you have for things you'll need or would buy not too long from now because--ta-da--those things *appreciate*. (That's what you call it when something costs $X today, and $X + something later.

If I'd purchased $100 in laundry detergent in 1/21 it would be worth $110. now. If I'd held on to the money, bank/checking interest would have returned it to me as $101.00.

[Bengus81]

20. Whatever,these interest hikes won't stop endless gouging by Oil companies and mega grocery outlets

Ask anyone,those are the two biggest things right now that you HAVE to buy. I could give a rats ass if the price of a 60" LED TV has gone up or ticket prices at the theater or NFL game. The first interest hike was when--six months ago? All I've seen is non-stop hikes at the pump despite a barrel of oil being nearly the same as it was in mid-March.

Nah...what will stop all this gouging BS will come after November 8th when Republicans Corporate buddies pull the plug on the rip off gouging so people won't start blaming THEM.

[Deminpenn]

19. Conversely, people who invested in bonds for retirement

will benefit. Rates on savings, checking accounts, money markets, CDs have all been 1% or less for years now. With the Fed raising its rate, banks and other bonds will start paying higher interest and generating more income for the holders.