Also, they want to allow insurers to compete across state lines. That’s huge. It’d have been cheaper to just block grant states money to enroll anyone without insurance in Medicaid. Instead, we got a ridiculously complicated and expensive mess. I’m pretty sure the goal was to screw it up so bad they’d create enough support to pass single-payer.
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I have a floating ARM and the interest rate will be increased by 1.125%. Payment will go up by 12%.
1 year libor has gone crazy and increased by 1.125% during the last year.
So today’s buyer will be paying 12% more each month than last year. But price has gone down 10%, so their burden is actually the same.
Powell is behaving strangely. He’s determined to break the stock bubble and slow the housing market. Hope he has a good intention and has a plan to handle crisis.
Powell & team focus is overall economy, but not necessarily real estate. Mortgage is based on MBS (depends on 10 year rate market decides, not FED) which govt/fed is not supporting by printing money.
He could cause a 1998 style emerging market crisis. He needs to get his head out of his ass and look at the world economy.
Is there any data point that says yr/yr prices are down 10%? They always peak in spring and are lower in winter. That’s seasonality.
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Actually price is up y/y. That can explain the slow market. Buyer’s burden has increased almost 20% y/y
The problem is that even though supply is limited it is too expensive to increase it to make it affordable. Sellers will have to take lower than asking or wait till buyers make more money. Supply is constantly being restricted. Building costs keep rising and there is no buildable land in the BA for sfhs
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Demand for mortgage is crashing but Heloc application has shot up. Many bloggers here have applied?
We don’t offer HELOC’s at present, so I don’t have a dog in this fight. At the latter part of 2021, rate and term refinances dwindled, but cash out refi’s swelled. That’s still the case, with HELOC requests not far behind. The use of Non-QM lending has also boomed (6/12/24 month bank statements, loose Interest Only loans, etc).
This is 2006-2007 all over again. As prices rose, traditional lending backed off. “2nd homes” (really, rental properties purchased under fraudulent terms) were getting harder to finance, HELOC’s and Alt-A (now called Non-QM) loans flowed into that gap - just as they are in 2021-2022. These loans are revenue generators when lenders are starving for inbound calls to keep staff busy. As we all may remember from history, this did not end well, yet here we are again!
Anecdotally speaking, I had a tech employee who I’ve worked with on several purchases since 2009 call me yesterday. He and his spouse had bought a $1.9m home about 10 months back using a 3.75% rate. His call was to see if his rate could be improve ( no ) or if there was any way possible to lower his monthly payment. I asked if he was “ok”, if he could be in any health emergency making the payment too hard to handle. He said “No, it’s just in 6 months I’m not sure if my or my wife’s current contracts will be renewed” There was a great deal of fear in his voice, a fear I heard often in 2007-2008, and 2009 during the recession of those days. The only option I could work on with his family was an Interest Only loan, but the numbers weren’t a good fit.
The general question in this most recent post was “is anyone else applying for a HELOC?” Given the market, a very high inflation rate, and softening values, I hope everyone is looking to apply for one, or consider cash out refinancing. It’s wise to have “dry powder” in case TSHTF and be ready if purchase opportunities arise out of the chaos over the horizon.
Thanks for reading.
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