Posted on 06/16/2022 9:05:16 AM PDT by lasereye
"I would say if you’re a home buyer, you need a bit of a reset," Fed Chairman Jerome Powell said yesterday.
U.S. mortgage rates surged the most in more than 36 years this week, data from Freddie Mac indicated Thursday, as house buying costs continue to track the Federal Reserve's interest rate path amid the ongoing surge in domestic inflation.
Freddie Mac, the biggest individual mortgage loan buyer in the country, said 30-year fixed mortgage rates surged to 5.78%, a half-point increase from last week and the biggest increase since 1987. The headline rate, Freddie Mac said, is the highest since the November 2008 housing crisis.
The surge follows the Fed's decision to hike its benchmark Fed Funds rate by three quarters of a percent -- the biggest single day move since 1994 -- to a range of 1.25% to 1.5%, amid the fastest domestic inflation in more than four decades.
Fed Chairman Jerome Powell also said there were more hikes to follow, with rate traders now betting on Fed Funds rate of between 3.5% and 3.75% by the end of the year.
The higher borrowing costs are likely to slow new and existing home buyers, and by extension tame some of the heat found in the broader housing market, although a lack of new inventory and a slump in new permits is keeping prices elevated.
“This idea in the headline that the Fed is hiking mortgage rates is erroneous. The Fed only controls one very short term rate. Powell never suggested at any point in his press conference that the Fed was hiking mortgage rates. It’s remarkable how people who write for financial websites think that - or he wants us to think that.”
The writer of the article states it correctly.
Did you watch the Powell Q&A yesterday. The questions came from infantile morons called financial journalists.
A 6% mortgage is still cheap, but I think this is headed in the 11-13% territory this year.
(”I would say if you’re a home buyer, you need a bit of a reset,”)
Sounds...... Great.....🤪🤔🤔🤔🤔
My first mortgage was 13%
Of course houses then sold for less than $100k.
Those same homes today are 300-400k
A 6% mortgage is still cheap...
*************
That may be true but home prices have run up significantly thereby making payments at that rate a challenge for many would be home buyers.
Just paid off my 4.5% 15 year home mortgage last year. Gotta love that timing.
I'm not exactly how the Fed funds rate affects other rates, but mortgage rates are based on 10-year U.S. Treasury rates, not the Fed funds rate.
Well, if you are running off $100 billion in longer-term assets a month, longer-term rates are quite likely to rise - and that’s just what the Fed is doing.
I am waiting for the day when the bank calls me up and offers to mark the balance down considerably if I am willing to pay it off in full. :-)
I am stunned by how much home prices increased last year. We sold a property in Colorado in February this year, and the prices was far above expectations of just late last year.
Housing prices will adjust, they’ve skyrocketed because Internet rates remained low for so long people could afford more expensive houses, home construction and housing didn’t stop in the early 80s when mortgage rates were more than twice what they are now, we will have a crash before the adjustments are complete
My first home was $62,500 with a 30-year mortgage at 11.15%
“but mortgage rates are based on 10-year U.S. Treasury rates,”
That is old school. Much more complicated now.
When the tide goes out, you can see who is swimming naked.
I’m betting we’re going to see a whole lot of booty.
My 4.25% mortgage is looking good again. Ha ha.
I paid off my 2.375% 15 year mortgage last year that I had taken out in 2012. I am completely debt free for the first time since 1989(when I bought my first house).
almost has to. a 6% rate is losing money at todays inflation
Freepers talking finance and business is about as daft
I love when posters insist all cost of business increase is simply passed on to customers just like that
Nonsense
Obviously from folks never ran a business
I expect we have to see a sharp decline in prices now. In 2020 I bought a house for a little under $160K at 3.375% interest. I have the impression it would be valued around $240K now (or in the recent past at any rate). At mortgage rates over 6%, that means instead of paying $5400 in interest, a new buyer today would need to shell out $14400 for the same house, just to cover the interest.
That’s not going to happen. And if history is any guide we may be in for much worse. Imagine if rates go to double digits. All those million-dollar houses in California will suddenly require over $100,000K/year just to cover the interest. Either people will have to pay cash (at a time when the Fed is trying to suck cash out of the economy), or prices will plummet.
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