By now it’s obvious that central banks are going to continue raising short term interest rates. It seems likely they will continue until the housing market finally snaps.
Albritton is booked out 30 days in advance, compared to the usual 90 to 160 days. Meanwhile, his costs have gone up by more than 30% across the board. Plywood he uses jumped from $72 to $140 a sheet around Christmas. It has gone back down to $85 a sheet, but that’s still higher than it used to be. And he has trouble finding hinges at any price.
The average rate on a 30-year mortgage is 5.55%, according to Freddie Mac. A year ago, the average was 2.87%. The increase is forcing some would-be buyers out of the market and sales of previously owned homes have fallen for six straight months.
The new Sask NDP leader is angry because Moe is paying down debt.
One of the talking potatoes on the radio sounded very sympathetic to her declarations.
But then if either of them understood basic math or economics……
My first Mortgage was 12.75%, then 8% five years on, and the best and last was 5.75% which seemed pretty damned good at the time.
Many years of hard pay-down with slow savings, only to pay it off and look forward to 1% savings rates once the savings grew forcing savings into the markets for any kind of growth. If only to compete with inflation.
If the last 15 years of “cheap” money wasn’t so readily available many people would have been far better off than they are today. The foolish & the thrifty.
My first was 5.625% 30-year fixed in January 2007; I paid $225 for the prviliege of doing no escrow accounts. Because my work income was so low I paid 70% down, the bank woman told me that 70% down was the ONLY reason I’d get the mortgage. If I defaulted the banks could make double their money on foreclosure! By late 2008 mortgages like mine were technically illegal because the govt. made it illegal to consider anything other than work income so an investment portfolio 5 times the mortgage amount no longer counted. So when I started discussing refi’s in 2011 the bank finally told me my wage income was too low and the officer told me he couldn’t even look at an Orange Money Market account statement showing 2X the balance of the mortgage.
I said, “I might as well pay it off!” “Don’t do that!” he responded; obviously I would NEVER be given a mortgage again. For the record, when Greenspan retired from the FED, he was buying a summer place–and was turned down for the mortgage. But something really strange was to happen to me.
Maybe a month after my refi was turned down, I got an unsolicited message from my mortgage-holder about participating in the HARP program. Since I was never late–what gives? After checking it was legit I talked with them and they were proposing a 3.875% 30-year fixed maturing one month earlier. The process even included a personal visit to my abode. Monthlies when from $343.40 or so to $295.28, not much of a savings as I expected. BUT–I shouldn’t have been eligible; maybe the bank (Citi) was do HARP’s with anyone so they could look better to the public. So I now have a “pet” mortgage which maybe I should name “Morgie” or something. Oh, Citi then sold it to Fannie or Freddie (whom I hate) and now Mr. Cooper does the servicing–Mr. Cooper makes having a mortgage almost a pleasure so now I won’t pay it off–bad investment anyways to pay it off. Within months savings accounts may be paying more than the amount of the mortgage.. Hey, I remember those days from the early 1980’s–I once did a 3-mo. T-Bill for 17.875% discount in 1981!
I figure they refied me to keep from having me pay the mortgage off entirely.
“–I once did a 3-mo. T-Bill for 17.875% discount in 1981!”
That’s what we need! 🙂
When you flood the world with currency one consequence will be inflation. Economists (Austrians) were pointing this out in 2020.
Many other bad things follow. We are seeing that playing out now.
Good! I look forward to the bold new era. The cheap money era sucked, and it didn’t start in 2009-it went back to 2001 and arguably started right when Greenspan took over.
My first was a 60K 5.625% 30-year fixed in January 2007; I paid $225 for the privilege of doing no escrow accounts. Because my work income was so low I paid 70% down, the bank woman told me that 70% down was the ONLY reason I’d get the mortgage. If I defaulted the banks could make double their capital on my foreclosure! By late 2008 mortgages like mine were technically illegal because the govt. made it illegal to consider anything other than work income, so an investment portfolio 5 times the mortgage amount no longer counted. So when I started discussing refi’s in 2011 the bank finally told me my wage income was too low and the officer told me he couldn’t even look at an Orange Money Market account statement showing twice the balance of the mortgage.
I said, “I might as well pay it off!” “Don’t do that!” he responded. Obviously I would NEVER be given a mortgage again. For the record, when Greenspan retired from the FED, he was buying a summer place–and was turned down for the mortgage. But something really strange was to happen to me.
Maybe a month after my refi was turned down, I got an unsolicited message on my phone from my mortgage-holder about participating in the HARP program. Since I was never late–what gives? After checking it was legit I talked with them and they were proposing a 3.875% 30-year fixed maturing one month earlier. The process even included a personal visit to my abode. Monthlies went from $343.40 or so to $295.28, not much of a savings as I expected. BUT–I shouldn’t even have been eligible for a HARP re-fi! Maybe the bank (Citi) was doing HARP’s with anyone so they could look better to the public. So I now have a “pet” mortgage which maybe I should name “Morgie” or something. Oh, Citi then sold it to Fannie or Freddie (whom I hate) and now Mr. Cooper does the servicing–Mr. Cooper makes having a mortgage almost a pleasure so now I won’t pay it off–bad investment anyways to pay it off. Why within months savings accounts may be paying more than the amount of the mortgage!
Hey, I remember those days from the early 1980’s–I once did a 3-mo. T-Bill for 17.875% discount in 1981!
I figure they refied me to keep me from paying off the mortgage entirely.
Good. Higher please.
Imagine having a 30 year 2.87 rate right now. The banks are going to start calling begging to refinance. I locked in like a boss at 1.2 for 5 years only unfortunately.
I somehow doubt that they are going to suddenly stop printing money, so all increasing interest rates does is delay the inevitable crash. If they actually wanted to solve the problem they would return to something like the gold standard and enact laws to prevent banks or government from printing money. Of course that’s not ever going to happen so economic collapse it is.