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'Unhealthy and unsustainable': Homebuyers aren't buying and homebuilders aren't building in the face of untamed mortgage rates
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Leroy N. Soetoro
Oct 22, 2022, 7:47:22 PM10/22/22
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https://finance.yahoo.com/news/unhealthy-unsustainable-homebuyers-aren-t-
120000234.html
U.S. mortgage rates crept up once again this week as demand for home loans
tumbled, according to a pair of widely followed reports.
Buyers and sellers are increasingly on edge as the average 30-year fixed
mortgage rate — now more than double what it was at the beginning of the
year — inches closer to 7%.
Homebuilders, too, are losing confidence in the housing market amid rising
rates, which one industry leader calls “unhealthy and unsustainable.”
“High mortgage rates approaching 7% have significantly weakened demand,
particularly for first-time and first-generation prospective homebuyers,”
Jerry Konter, chairman of the National Association of Home Builders, said
this week.
“Policymakers must address this worsening housing affordability crisis.”
30-year fixed-rate mortgages
The average rate on a 30-year fixed mortgage hit 6.94% this week, up from
6.92% a week earlier, mortgage finance giant Freddie Mac reported on
Thursday. A year ago at this time, the 30-year rate averaged 3.09%.
While the latest rate increase was more moderate than in previous weeks,
borrowing costs are still at a 20-year high and getting worse.
“The 30-year fixed-rate mortgage continues to remain just shy of 7% and is
adversely impacting the housing market in the form of declining demand,”
says Sam Khater, Freddie Mac’s chief economist.
“Additionally, homebuilder confidence has dropped to half what it was just
six months ago and construction, particularly single-family residential
construction, continues to slow down.”
15-year fixed-rate mortgages
The rate on a 15-year fixed mortgage is averaging 6.23%, up from 6.09%
last week, Freddie Mac says. A year ago at this time, the 15-year rate was
averaging 2.33%.
Since then, buyers have lost significant buying power — and many have had
to adjust their budgets or put their searches on hold.
Faced with fewer buyers, sellers are no longer able to call all the shots.
“Among recently sold properties that were on the market for more than a
month, sellers had to drop prices by 12% on average,” says Nadia
Evangelou, senior economist for the National Association of Realtors.
Read more: Did you buy a house before 2022? If the answer is 'no,' you
will likely be on the wrong end of financial inequality over the next
decade — here's why
5-year adjustable-rate mortgage
The increasingly popular five-year adjustable-rate mortgage (ARM) averaged
5.71% this week, down from 5.81% a week earlier.
A year ago at this time, these adjustable mortgages averaged 2.54%.
This week’s rate dip is likely to fuel even more demand for the five-year
ARM, which comes with a fixed rate for the first five years and then
adjusts up or down based on a benchmark like the prime rate.
Buyers have been scooping up adjustable-rate mortgages at a rate not seen
since the Great Recession, betting they’ll have an opportunity to
refinance into a lower, fixed-rate mortgage before their ARM adjusts.
Mortgage rates could be at a ‘new normal’
Rates have been steadily increasing this year amid actions by the Federal
Reserve to tamp down decades-high inflation — despite the pain it’s
causing consumers.
Today’s rates could be considered “the new normal,” says Evangelou.
She points out that 7% rates were typical in the mid-to-late 1990s and
early 2000s. Yet homeownership then was higher than it is now.
“Today’s potential buyers also have to deal with higher inflation,”
Evangelou says. “While inflation outpaces wage growth, the typical family
needs to stretch out its budget and spend more than 25% of its income on
its mortgage payment.
“Including other expenses such as mortgage insurance, home insurance,
taxes and expenses for property maintenance, home buying costs exceed 30%
of a typical family’s income.”
Mortgage applications this week
Mortgage applications fell 4.5% week over week, according to the latest
report from the Mortgage Bankers Association (MBA).
“The speed and level to which rates have climbed this year have greatly
reduced refinance activity and exacerbated existing affordability
challenges in the purchase market,” says Joel Kan, the MBA’s vice
president and deputy chief economist.
“Residential housing activity ranging from housing starts to home sales
have been on downward trends coinciding with the rise in rates.”
Applications to refinance existing loans fell 7% from a week earlier and
were 86% lower than last year. The refi share of mortgage activity fell to
28.3%, down from 29% the previous week.
Mortgage applications to purchase homes were down 4% this week — and were
38% lower than the same week a year ago.
“With rates at these high levels, the ARM share rose to 12.8% of all
applications, which was the highest share since March 2008,” Kan says.
“ARM loans continue to remain a viable option for borrowers who are still
trying to find ways to reduce their monthly payments.”
What to read next
Should I wait for the housing market to plummet before buying a house? 3
reasons why this housing downturn is nothing like 2008
'It was tough, scary times': Baby-boomer financial experts who lived
through the Great Inflation recount ways to ride out a recession
Here's how much the average American 60-year-old holds in retirement
savings — how does your nest egg compare?
This article provides information only and should not be construed as
advice. It is provided without warranty of any kind.
--
"LOCKDOWN", left-wing COVID fearmongering. 95% of COVID infections
recover with no after effects.
No collusion - Special Counsel Robert Swan Mueller III, March 2019.
Officially made Nancy Pelosi a two-time impeachment loser.
Donald J. Trump, cheated out of a second term by fraudulent "mail-in"
ballots. Report voter fraud: sf.n...@mail.house.gov
Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.
120000234.html
U.S. mortgage rates crept up once again this week as demand for home loans
tumbled, according to a pair of widely followed reports.
Buyers and sellers are increasingly on edge as the average 30-year fixed
mortgage rate — now more than double what it was at the beginning of the
year — inches closer to 7%.
Homebuilders, too, are losing confidence in the housing market amid rising
rates, which one industry leader calls “unhealthy and unsustainable.”
“High mortgage rates approaching 7% have significantly weakened demand,
particularly for first-time and first-generation prospective homebuyers,”
Jerry Konter, chairman of the National Association of Home Builders, said
this week.
“Policymakers must address this worsening housing affordability crisis.”
30-year fixed-rate mortgages
The average rate on a 30-year fixed mortgage hit 6.94% this week, up from
6.92% a week earlier, mortgage finance giant Freddie Mac reported on
Thursday. A year ago at this time, the 30-year rate averaged 3.09%.
While the latest rate increase was more moderate than in previous weeks,
borrowing costs are still at a 20-year high and getting worse.
“The 30-year fixed-rate mortgage continues to remain just shy of 7% and is
adversely impacting the housing market in the form of declining demand,”
says Sam Khater, Freddie Mac’s chief economist.
“Additionally, homebuilder confidence has dropped to half what it was just
six months ago and construction, particularly single-family residential
construction, continues to slow down.”
15-year fixed-rate mortgages
The rate on a 15-year fixed mortgage is averaging 6.23%, up from 6.09%
last week, Freddie Mac says. A year ago at this time, the 15-year rate was
averaging 2.33%.
Since then, buyers have lost significant buying power — and many have had
to adjust their budgets or put their searches on hold.
Faced with fewer buyers, sellers are no longer able to call all the shots.
“Among recently sold properties that were on the market for more than a
month, sellers had to drop prices by 12% on average,” says Nadia
Evangelou, senior economist for the National Association of Realtors.
Read more: Did you buy a house before 2022? If the answer is 'no,' you
will likely be on the wrong end of financial inequality over the next
decade — here's why
5-year adjustable-rate mortgage
The increasingly popular five-year adjustable-rate mortgage (ARM) averaged
5.71% this week, down from 5.81% a week earlier.
A year ago at this time, these adjustable mortgages averaged 2.54%.
This week’s rate dip is likely to fuel even more demand for the five-year
ARM, which comes with a fixed rate for the first five years and then
adjusts up or down based on a benchmark like the prime rate.
Buyers have been scooping up adjustable-rate mortgages at a rate not seen
since the Great Recession, betting they’ll have an opportunity to
refinance into a lower, fixed-rate mortgage before their ARM adjusts.
Mortgage rates could be at a ‘new normal’
Rates have been steadily increasing this year amid actions by the Federal
Reserve to tamp down decades-high inflation — despite the pain it’s
causing consumers.
Today’s rates could be considered “the new normal,” says Evangelou.
She points out that 7% rates were typical in the mid-to-late 1990s and
early 2000s. Yet homeownership then was higher than it is now.
“Today’s potential buyers also have to deal with higher inflation,”
Evangelou says. “While inflation outpaces wage growth, the typical family
needs to stretch out its budget and spend more than 25% of its income on
its mortgage payment.
“Including other expenses such as mortgage insurance, home insurance,
taxes and expenses for property maintenance, home buying costs exceed 30%
of a typical family’s income.”
Mortgage applications this week
Mortgage applications fell 4.5% week over week, according to the latest
report from the Mortgage Bankers Association (MBA).
“The speed and level to which rates have climbed this year have greatly
reduced refinance activity and exacerbated existing affordability
challenges in the purchase market,” says Joel Kan, the MBA’s vice
president and deputy chief economist.
“Residential housing activity ranging from housing starts to home sales
have been on downward trends coinciding with the rise in rates.”
Applications to refinance existing loans fell 7% from a week earlier and
were 86% lower than last year. The refi share of mortgage activity fell to
28.3%, down from 29% the previous week.
Mortgage applications to purchase homes were down 4% this week — and were
38% lower than the same week a year ago.
“With rates at these high levels, the ARM share rose to 12.8% of all
applications, which was the highest share since March 2008,” Kan says.
“ARM loans continue to remain a viable option for borrowers who are still
trying to find ways to reduce their monthly payments.”
What to read next
Should I wait for the housing market to plummet before buying a house? 3
reasons why this housing downturn is nothing like 2008
'It was tough, scary times': Baby-boomer financial experts who lived
through the Great Inflation recount ways to ride out a recession
Here's how much the average American 60-year-old holds in retirement
savings — how does your nest egg compare?
This article provides information only and should not be construed as
advice. It is provided without warranty of any kind.
--
"LOCKDOWN", left-wing COVID fearmongering. 95% of COVID infections
recover with no after effects.
No collusion - Special Counsel Robert Swan Mueller III, March 2019.
Officially made Nancy Pelosi a two-time impeachment loser.
Donald J. Trump, cheated out of a second term by fraudulent "mail-in"
ballots. Report voter fraud: sf.n...@mail.house.gov
Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.
governo...@gmail.com
Oct 23, 2022, 2:08:08 AM10/23/22
to
On Sat, 22 Oct 2022 23:47:19 -0000 (UTC), "Leroy N. Soetoro"
<democrat-...@mail.house.gov> wrote:
>Buyers and sellers are increasingly on edge as the average 30-year fixed
>mortgage rate — now more than double what it was at the beginning of the
>year — inches closer to 7%.
What a hoot! When Reagan was President, 7% was considered a cheap
<democrat-...@mail.house.gov> wrote:
>Buyers and sellers are increasingly on edge as the average 30-year fixed
>mortgage rate — now more than double what it was at the beginning of the
>year — inches closer to 7%.
home loan.
Swill
--
The "Rus" are running out of ammo so they're thowing dynamite sticks at the
Ukrainians. The Ukranians are picking it up, lighting it and throwing it back.
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