Fed’s Limbo Rock! Mortgage Purchase Applications Drop 18% WoW (And -21% YoY), Refi Applications Drop 6% WoW (And -75% YoY) How HIGH Can They Go??

Confounded Interest ^ | 06/08/2022 | Anthony B. Sanders

[Browns Ultra Fan]

Its The Fed’s Limbo Rock! Except that it is how HIGH can they go? Mortgage rates have soared 71.4% over the past year as The Fed signals tightening of monetary policy.

Mortgage applications decreased 6.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 3, 2022. This week’s results include an adjustment for the Memorial Day holiday.

The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 18 percent compared with the previous week and was 21 percent lower than the same week one year ago.

The Refinance Index decreased 6 percent from the previous week and was 75 percent lower than the same week one year ago.

How HIGH can The Fed go?

[Browns Ultra Fan]

Check out the last chart as consumers turn to credit cards to cope with Bidenflation and save less.

[PGR88]

The Fed is hoping that upcoming recession will solve their inflation problem

[BusterDog]

Dropping to damn near ZERO in 3, 2, 1 . . .

[neverevergiveup]

Eventually home prices will drop, but with rates high there will still be fewer buyers - with the exception of those with FHA loans that the government will ensure have a low rate. Thus, another way the lazy sloth in Congress, like AOC, will push ‘redistribution’.

Redistribution is essentially the reverse of the story of the three little pigs. Instead of the industrious hard-working little pig benefiting from his efforts and having more in the end, in the government's version he has his property devalued and given to the lazy little pigs. Doesn't get much more unfair, but this is ‘fairness’ in the scrambled minds of the left.

[WMarshal]

Smells like 2008 real estate crash all over again.

[MulberryDraw]

“The current average 30-year fixed mortgage rate climbed 4 basis points from 5.01% to 5.05% on Wednesday, Zillow announced.”
https://www.zillow.com/mortgage-rates/
They’re less than half the rate on our first mortgage. I think they can go much higher than people expect.

[Tell It Right]

"How HIGH can The Fed go?"

A. I don't believe the Fed's current work of slowly raising interest rates and reducing their balance sheet will lower inflation. They'll have to press harder on the gas pedal.

B. The Fed has made it clear that their QT will reduce their balance sheet by $90 billion. Given that their balance sheet is currently $1 trillion, we're talking about a reduction of only 1 percent. Basically a big nothingburger.

C. If for whatever reason the Fed doesn't give up more of their balance sheet (B), the Fed will be forced to increase rates bigly if they want to get inflation under control.

[Mr. Jeeves]

Yes, today’s rates are still not high at all by historical standards. Rising rates don’t kill housing demand - but they do force buyers to lower their expectations about the square footage and amenities their target monthly payment can buy.

[woodbutcher1963]

“Smells like 2008 real estate crash all over again.”

Unlikely. Yes, a correction, but not a crash. The problem is that from 2008-2018 we as a nation under built housing units.
For a nation of 330 million people we need to construct 1.5 million units/year just to keep up with average demand. Houses on average only last 75 years. They burn down, get flooded, torn down and rebuilt.

It has only been the last few years that we exceeded 1.5 million homes. In the early 2000’s we got up to 2.4 million homes(2004-2005). We overbuilt. Many of these houses were being bought by speculators and flipped. Especially in places like AZ, FL, NV & CA. That is not the case currently.
People are buying houses to live in.

The big shift is people leaving urban large urban areas and moving to the suburbs and country. All the trends we have been discussing here for the last two years. Like leaving NYC, Chicago, San Fran and moving to TX, FL, SC, AZ, ID, MT, NC, NH, ME, VT, CO, GA.

Some markets have already topped. I sell a large home builder in Idaho. They have already dropped the price of their homes by 15%. They are seeing that many people are not able to qualify for the mortgage based on the higher rates and price. This will lead to overall prices coming down.

Plus, we have major real estate investment firms like Blackrock, Fundrise, Crowdsource that are all buying multifamily and single family in markets just to rent them out. These companies see that there is going to be a continual percentage of people who will NEVER be able to own a home. They will always rent. These companies are hoping for a correction in the market so they can buy more rental properties.

[Organic Panic]

I have been unable to find it. But I would love to see how much money the taxpayers pay to Blackrock and the like to house the millions of illegal aliens and “asylum seekers” through direct subsidies or taxpayer funded “charities.”

[Nifster]

The misery index is very high

[9YearLurker]

Those who have been around can imagine this as only the beginning:

https://fred.stlouisfed.org/series/MORTGAGE30US

[9YearLurker]

We’ve got millions of illegals getting shipped in annually. They’ve gotta live somewhere.

And it is the modestly skilled who get doubly hit by that, as they compete for low-skill jobs and drive up demand for once low-cost housing.