Mortgage rates could hit 8%, economists say, citing a worrying sign not seen since the Great Recessi

[libertybele]

Mortgage rates could hit 8%, economists say, citing a worrying sign not seen since the Great Recession

With mortgage rates firmly above 7%, homeownership has become much more expensive. But will rates go even higher?

Three experts told MarketWatch that if the economy continues to show signs of strength, and the U.S. Federal Reserve hikes its benchmark interest rate once again, rates could go up to 8%.

High rates have already taken a toll on the U.S. housing market. Even home builders, who have in recent months experienced strong demand from homebuyers, are reporting a drop in buyer traffic as those rising rates rattle their customers.

But experts also stressed that the U.S. economy is showing early signs of cooling, and that the rate of inflation is easing. That could lead to a slowdown — or even a drop — in mortgage rates. But such forecasts are not a guarantee, as Tuesday’s stronger-than-expected U.S. retail sales figures suggested............

https://www.marketwatch.com/story/mortgage-rates-could-hit-8-economists-say-citing-a-worrying-sign-not-seen-since-the-great-recession-edf2b4a4?mod=home-page

[DB]

Up until around 2000 around 8% was a pretty typical 30 year home mortgage rate. Then after 2001 the rates went artificially low and there has been chaos ever since.

[libertybele]

Up until around 2000 around 8% was a pretty typical 30 year home mortgage rate. Then after 2001 the rates went artificially low and there has been chaos ever since.

During the Carter years people were having to take out 'balloon' mortgages because rates were so high.  People have become accustomed to lower interest rates. The cost of homes have skyrocketed.  IMHO we're nearing a housing bubble.  Prices will decline some and once the evil one is out of office (God willing) we'll see interest rates come down a bit.

[mountaineer]

A 30-year fixed mortgage payment on a $410,000 home was $1,358/mo in August 2021. Today, it's $2,202/mo.

https://twitter.com/RNCResearch/status/1692272445653193100

[bigheadfred]

A 30-year fixed mortgage payment on a $410,000 home was $1,358/mo in August 2021. Today, it's $2,202/mo.

https://twitter.com/RNCResearch/status/1692272445653193100

Good thing all other household expenses are way down or people would really be hurting

[LMAO]

Up until around 2000 around 8% was a pretty typical 30 year home mortgage rate. Then after 2001 the rates went artificially low and there has been chaos ever since.

8% was typical for most loans

My first car loan was close to that

My and the wife’s student loans were 8%

[corbe]

   I can't believe Fannie and Freddie are still around.  Thank you Barney Frank (Q-MA)

[Wingnut]

During Carternomics my 1st home loan was 9.5% on an 83K home.  Our Income was 28.5K per year.  Some how we made it.  But we didn't have all the extra "necessities" people have to today to dig into a budget.  You know, things like Cell bills, Media expenses, Starbucks, .....

[Kamaji]

8% was typical for most loans

My first car loan was close to that

My and the wife’s student loans were 8%

Car loans tend to have higher rates than housing mortgages because the asset securing the loan is (a) mobile, so there is higher risk of loss, and (b) wasting, so there is higher risk that the security will be inadequate to cover the outstanding principal if the security - i.e., the car - is repossessed.

[DB]

Car loans tend to have higher rates than housing mortgages because the asset securing the loan is (a) mobile, so there is higher risk of loss, and (b) wasting, so there is higher risk that the security will be inadequate to cover the outstanding principal if the security - i.e., the car - is repossessed.

Car loans use to be no more than 4 years and you had to carry comprehensive insurance. You also needed to make a substantial down payment.

For houses prior to around 2000 it was common to require at least a 10% down payment. The more you paid down the better the interest rate. Then things went to zero down in the mid 2000's and we all know what followed...

[libertybele]

My first car loan was during the Carter administration.  I put half the money down and they still made my Dad co-sign for the loan. The interest rate was 14%.  I remember that they only way my piano teacher could sell their home was on a balloon mortgage.  Things were a mess.  Gas lines were long or you couldn't find gas also.

[DB]

My first car loan was during the Carter administration.  I put half the money down and they still made my Dad co-sign for the loan. The interest rate was 14%.  I remember that they only way my piano teacher could sell their home was on a balloon mortgage.  Things were a mess.  Gas lines were long or you couldn't find gas also.

Fortunately the Carter years didn't last too much longer than his administration.

[Kamaji]

Car loans use to be no more than 4 years and you had to carry comprehensive insurance. You also needed to make a substantial down payment.

For houses prior to around 2000 it was common to require at least a 10% down payment. The more you paid down the better the interest rate. Then things went to zero down in the mid 2000's and we all know what followed...

Cars last longer now, so loan terms have expanded.  It's also easier to get a loan on a used car, most likely because cars last longer now.  Comprehensive insurance is still generally required.

[DB]

Cars last longer now, so loan terms have expanded.  It's also easier to get a loan on a used car, most likely because cars last longer now.  Comprehensive insurance is still generally required.

I think is because the car market would dry up if you had to pay for a far more expensive car in 4 years or less. The rising cost of car has substantially exceeded rising incomes. Regarding insurance, yes if you have any kind of lender on the title.

[Kamaji]

I think is because the car market would dry up if you had to pay for a far more expensive car in 4 years or less. The rising cost of car has substantially exceeded rising incomes. Regarding insurance, yes if you have any kind of lender on the title.

Maybe so, but cars most definitely last a lot longer than they used to, thereby justifying longer exposures to risk.  If that were not the case, only the high-risk lenders would take on longer car longs, but that is not the case, and the interest rates would be significantly higher to accommodate that higher risk. 

The cost factor is also dealt with primarily through the increase in the availability of leasing, or lease-to-own, solutions.

[Weird Tolkienish Figure]

It's been so long since you could get such a good rate on Savings accounts though. Might be a nice time to get some CD's (what are those)?

That's the upside to high interest rates.

https://www.cnet.com/personal-finance/banking/cds/dont-wait-even-though-the-fed-raised-rates-experts-say-now-is-the-time-to-lock-in-a-long-term-cd/

[Kamaji]

It's been so long since you could get such a good rate on Savings accounts though. Might be a nice time to get some CD's (what are those)?

That's the upside to high interest rates.

https://www.cnet.com/personal-finance/banking/cds/dont-wait-even-though-the-fed-raised-rates-experts-say-now-is-the-time-to-lock-in-a-long-term-cd/

[mountaineer]

The average 30-year fixed U.S. mortgage rate jumps to 7.48%.  That’s the highest reading since 2000.

https://twitter.com/NewsLambert/status/1693660175364706681

[roamer_1]

I think is because the car market would dry up if you had to pay for a far more expensive car in 4 years or less. The rising cost of car has substantially exceeded rising incomes. Regarding insurance, yes if you have any kind of lender on the title.

Or the price would have to drop radically...

The same thing with housing... two points on half a million is a giant difference on the payment.
All those McMansions are a drug on the market right now, I bet.

[DB]

Or the price would have to drop radically...

The same thing with housing... two points on half a million is a giant difference on the payment.
All those McMansions are a drug on the market right now, I bet.

Cars are expected to have all sorts of safety features these days that are not inexpensive. Antilock brakes, traction control, rear camera, rear something approaching from the side detectors, lane departure detectors, automatic breaking when approaching something head on detector, adaptive cruise control, numerous airbags, bluetooth hands free cell phone connection, etc. It is probably hard to sell a car these days without most of those.

[roamer_1]

Cars are expected to have all sorts of safety features these days that are not inexpensive. Antilock brakes, traction control, rear camera, rear something approaching from the side detectors, lane departure detectors, automatic breaking when approaching something head on detector, adaptive cruise control, numerous airbags, bluetooth hands free cell phone connection, etc. It is probably hard to sell a car these days without most of those.

Yeah... Maybe the high price and low margin will force them back into a radio, a stick and manual windows, and no damn butt warmers for a change... Might get me interested...

[catfish1957]

Hate to sound greedy, but I personally view seeing some fixed investment instuments like sound Corporate Bonds at near 10% as a welcome addition to my portfolio.

As I've done in the past 40 years.....  You gotta ride the waves as they happen.

[Smokin Joe]

Car loans use to be no more than 4 years and you had to carry comprehensive insurance. You also needed to make a substantial down payment.

For houses prior to around 2000 it was common to require at least a 10% down payment. The more you paid down the better the interest rate. Then things went to zero down in the mid 2000's and we all know what followed...

In '87, paid 10% down, got a 9.1 fixed rate 30 yr, in a local real estate bust, so it was about 35% what the house had cost in '85. During the refi frenzy later, the lender called me and offered to drop it to 5.1%, and I said all other terms the same? They said "Yes" and so did I.
I paid it off a couple years early by just rounding up to the next $50. Still live there.

[Smokin Joe]

Yeah... Maybe the high price and low margin will force them back into a radio, a stick and manual windows, and no damn butt warmers for a change... Might get me interested...

Yeah, ABS locked up all 4 wheels on me once. I had the presence of mind to shut it off, wait 5 seconds, and reboot the ABS computer. That worked, but I got to thinking about being stuck that way in an intersection with some semi coming at me after the light changed, and not having 5 seconds... 
Not going there.
When I got home, I popped the hood, pulled that 60 amp fuse and laid it down in the fuse box and put the cover back on.
 I learned to drive on ice and snow old school, and it still works best.
Besides, I can lock them up to startle some idiot out of getting in the way.

(No never ever cruise control in winter, either. That's for dry roads and speed traps.)

[DB]

Yeah, ABS locked up all 4 wheels on me once. I had the presence of mind to shut it off, wait 5 seconds, and reboot the ABS computer. That worked, but I got to thinking about being stuck that way in an intersection with some semi coming at me after the light changed, and not having 5 seconds... 
Not going there.
When I got home, I popped the hood, pulled that 60 amp fuse and laid it down in the fuse box and put the cover back on.
 I learned to drive on ice and snow old school, and it still works best.
Besides, I can lock them up to startle some idiot out of getting in the way.

(No never ever cruise control in winter, either. That's for dry roads and speed traps.)

Adaptive cruise control is pretty nice on long trips.

[Weird Tolkienish Figure]

Adaptive cruise control is pretty nice on long trips.

I use it in Boston traffic all the time.

[roamer_1]

Yeah, ABS locked up all 4 wheels on me once. I had the presence of mind to shut it off, wait 5 seconds, and reboot the ABS computer. That worked, but I got to thinking about being stuck that way in an intersection with some semi coming at me after the light changed, and not having 5 seconds... 
Not going there.
When I got home, I popped the hood, pulled that 60 amp fuse and laid it down in the fuse box and put the cover back on.
 I learned to drive on ice and snow old school, and it still works best.
Besides, I can lock them up to startle some idiot out of getting in the way.

(No never ever cruise control in winter, either. That's for dry roads and speed traps.)

That's right... all of it. ABS is disabled throughout my family's vehicles, and while it ain't a regular part of conversation, it comes up enough to know it to be true among my friends too. To include hands off the cruise all winter.

Good drivers prefer old school control of a vehicle, because they know how to handle real time.

[roamer_1]

Adaptive cruise control is pretty nice on long trips.

Not on snow...

[Weird Tolkienish Figure]

Not on snow...

You're not talking about traction control are you? I'm not sure why you'd use adaptive cruise control in snow. It's most useful in traffic.

[roamer_1]

You're not talking about traction control are you? I'm not sure why you'd use adaptive cruise control in snow. It's most useful in traffic.

traction control too... I don't want any of it active in the winter.

Give me an old truck with tall pizza cutters (siped and studded), a stick, and posi front and rear (lockers, even better),about 500 pounds in the box, and plenty of power, and I'll do better than most.

Any of that fancy stuff will get you dead in snow and ice.

[DefiantMassRINO]

My first new car loan was 11%.(1990s)

My first mortgage was 7%. (1990s)  Refinanced at 7.125% for lower monthly payment. (2000s)

15 years of artificially low interest rates has spoiled some on the youngins.

I still hear war stories about mortgage rates during the Carter / Volcker years.

[mountaineer]

Fed Chair Powell calls inflation ‘too high’ and warns that ‘we are prepared to raise rates further’
Published Fri, Aug 25 2023
10:04 AM EDT Updated 2 Hours Ago
Jeff Cox, CNBC

Key Points

    *While acknowledging that progress has been made, the central bank leader said inflation is still above where policymakers feel comfortable.
    *The speech resembled remarks Powell made last year at Jackson Hole, during which he warned that “some pain” was likely as the Fed continues its efforts to pull runaway inflation back down to its 2% goal.
    *A strong economy and decelerating inflation also give the Fed room to “proceed carefully” at upcoming meetings.  ...

[mountaineer]

Mortgage rates just hit a 22-year high, take these 4 steps today to prepare for a home purchase tomorrow
There’s no magic bullet for frustrated homebuyers, but these tips should eventually pay off.
Published Tue, Sep 5 2023
Jason Stauffer

Average 30-year fixed mortgage rates are sitting at a 22-year high, and home prices continue to inch higher, exacerbating the market for homebuyers. In the last year, a buyer with a $3,000 budget has lost $71,000 in buying power, according to Redfin.

As disheartening as it can be when factors outside of your control get in the way of your dreams, there are steps you can take to regain agency over your homebuying plans. Remember, even when the market as a whole seems hostile to buyers, you only need to find that one home where everything comes together. These four tips can help get you ready to act when you come across a good deal and the timing is right for you.

4 tips to prepare for a home purchase 

Rather than wait for a housing crash or for mortgage rates to dip, take these steps to put yourself in the driver’s seat. Over time, saving money, paying off debt, managing your credit score and educating yourself will greatly increase your chances of becoming a homeowner.  ... 

CNBC

No, wait, things are looking up!

U.S. mortgage rates dip after surpassing 20-year highs
The 30-year fixed mortgage rate averaged 7.18% for the week ended Aug. 31 — down from 7.23% the prior week.
By Dayton Business Journal staff
Sep 5, 2023

The 30-year fixed mortgage rate averaged 7.18% for the week ended Aug. 31 — down from 7.23% the prior week. ...

[roamer_1]

Boy, when the bubble pops, folks are gonna be so underwater...

[Wingnut]

Funny that most of us survived the 80's with high mortgage rates back then.  Wonder what is different this time?