Posted on 05/22/2022 8:27:42 AM PDT by Browns Ultra Fan
Mortgage rates have increased dramatically under “Middle Class Joe” as The Federal Reserve attempts to choke-off inflation caused by … The Fed coupled with Biden’s energy policies (hope you are enjoying those high gasoline and diesel prices!) and the Federal government’s staggering spending spree under Pelosi, Schumer and McConnell.
Thus far, The Federal Reserve has leveled-out out their Treasury Note and Bond purchases, increased their Agency Mortgage-backed Securities (AgMBS) holdings, but strangely have reduced their holding of Treasury Inflation-Protected Securities (TIPS) in the face of rising inflation.
And while The Fed Funds Target rate is a lowly 1%, it is projected to rise to 2.890% by the February 1, 2023 FOMC meeting. That should send mortgage rates up.
As if mortgage rates haven’t skyrocketed already, thanks to The Fed’s jawboning about having to raise rates and extinguish inflation.
With sizzling mortgage rates (cooling a bit as the global economy slows), home mortgage payments have risen +43.4% YoY.
Now we have President Biden trying to scare us about the Monkey Pox, yet leaves the southern border wide open. One would think that Biden would shut the borders (as if the surge in Fentanyl, sex trafficking and other diseases aren’t reason enough. But I do predict another massive spending bill from Biden/Congress to combat Monkey Pox and the resurgence of Covid variants.
Meanwhile The Fed jawbones fighting inflation with monetary tightening in the future, even if they jawboning causes mortgage rates to soar and mortgage payments to spiral.
(Excerpt) Read more at confoundedinterest.net ...
Mortgage rates will go up 43%. Mortgage payments are not.
Simple financial math escapes more folks these days.
Woe to those with an adjustable rate mortgage.
For the most part, the Fed has been a bunch of talk so far.
Surprised? His handlers and string-pullers want it this way. They want to eliminate the productive middle class (White) and just have two classes: the ruling elite and the poor slobs who depend on government, (like in Venezuela, the Soviet Union and Cuba).
Problem is, without the hard-working productive middle class there’s no wealth being produced and the ruling elite is living off the accumulated wealth that they already had.
“Mortgage rates will go up 43%. Mortgage payments are not.’”
That’s for people who already have a fixed rate mortgage and are staying put.
But if you’re buying a new house your payments are suddenly going to be 40% higher (and going even higher) than they were just a few months ago.
Guess what that is going to do to the housing market?
> ruling elite is living off the accumulated wealth that they already had <
For quite some time the United States has been moving by inertia. We are living well only because of prior generations.
It’s kinda like a hockey puck sliding along a long stretch of ice. It’s a bit hard to notice, but that puck is slowing down. And it will eventually stop.
I’ve noticed an increase in foreclosures (per newspaper legal section) in the last few weeks. (east central MO) If the market collapses again the properties won’t be as easy to ‘resell’ as they were in 2008- because of the rampant inflation we are experiencing and the continuing rise in interest rates.
Over time price will adjust inversely with interest rates. If I go to sell my house when rates hit 10%, I will have to adjust my asking price so that the total payment will be in alignment with what people can pay for a 4 bedroom house in my neighborhood.
Exactamundo!
That’s why the price of houses will soon start falling, ESPECIALLY if we go into a recession and unemployment goes up.
We are in a recession as soon as next quarters GDP numbers are released. The number on growth will be negative again. That will make the technical definition of recession. Not in 2023 or 2024 but in July so expect the markets to tank further. When Walmart says sales / revenue are down the rest of the country is down biggly.
10% to 12% mortgage rates are warranted...at least.
And until such time as the economy shows no price increases.
NONE.
Clear the balance sheet and raise the overnight rate to 10%.
Hold all for one year.
THEN take a look around.
It’s what Paul Volker would do.
“Inflation emerged as an economic and political challenge in the United States during the 1970s. The monetary policies of the Federal Reserve board, led by Volcker, were widely credited with curbing the rate of inflation and expectations that inflation would continue. US inflation, which peaked at 14.8 percent in March 1980, fell below 3 percent by 1983. The Federal Reserve board led by Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981. The prime rate rose to 21.5% in 1981 as well, which helped lead to the 1980–1982 recession,[23] in which the national unemployment rate rose to over 10%.”
https://en.wikipedia.org/wiki/Paul_Volcker
The ONLY way out of this is the HARD WAY.
Stagflation here we come.
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