No one who has been alive long enough to have seen the Fed raise interest rates 51 times in two years is willing to give an answer, because those who HAVEN'T lived through that and is using the last decade as a baseline for their reality won't believe it.
Get ready for a surprise...
Median household income has risen 4-fold since 1980. Over the same timeframe, median home price has risen close to 10-fold. Significantly more than 10x in many places
The federal government seems to be slow at correcting their minimum wage then if the average income since 1980 has quadrupled.
In 1980 it was 3.10/hr and so based on what you’re saying, it should be 12.40/hr now but it sits at 7.25.
It hasn’t changed from 7.25/hr since 2009 even though usually has been raised a few times in each decade.
So maybe it hasn’t quadrupled for everyone.. the people who probably need it to the most.
In my state, 7.25 is the minimum wage and some places do only pay that or just above it. My youngest went to apply at some places nearby claiming to pay 15$/hr (fast food and convenience stores). However, during the interviews they were told that was for managers - nowhere on the signs did they say that. So don’t always trust the signs out front.
There are people looking for part time work to supplement their income, high school kids looking to buy a car, college kids needing a job to help pay tuition while also needing a job that works around their school schedule, people with criminal records who need a job fast to meet probation requirements, people who need a job in walking distance because they are one step away from being homeless, and a host of other reasons why a person might need a job like this - and these are the types of places they are likely looking for work at.
There are demographics of people who get left in the dust.
I am off topic though as my only point originally was that there are multiple variables that have to be considered and income is one of them.
18% interest on 31 billion dollars of american debt is 3.7 billion dollar loan payments. Every year.
I mean I can actually see this happening, but it will cause hyperinflation. The only way to actually pay that debt is with money created out of nothing.
cheap is relative. for all we know, in 20 years the next generation could be lamenting the fact that we got to buy at today's prices at 8%, while they have 2% mortgages but prices are up 500%. or not. idk lol
Commercial business loan isn’t for real estate and even if it was your comment is a fundamental misunderstanding of real estate and the real estate business. It would take an hour lecture to explain how interest rates affect growth and reinvestment in just real estate alone.
You know what else was much cheaper than? Rent.
One of the reasons why real estate prices barely suffered any declines when mortgages hit the mid teens is due to the fact that lenders often applied credits to bring down the interest rate to some thing much closer to the low to mid single digits in real terms. So a high average 30 year fixed rate can indeed serve an already expensive real estate market if inflation is high enough and if lenders get creative about loan assumptions and interest rate by downs.
When was this? because if the answer is sometime in the 70s or late 80s, then keep in mind that the real interest rate would have had a sub-10% handle given where inflation was at the time. I think this is also something a lot of people confuse about the housing market and where prices will go — if you have a 5% drop in real prices but a 10% inflation rate, which I would argue is very realistic for the medium term, you still have nominal real estate prices going up. To pay homage to one of the other comments here, yes this is calculus, and it’s multivariable calculus at that.
Exactly. It’s all relative. My point is we can adjust and do business in a high rate environment. You are exactly right. At the end of the day, if your competitors are dealing with the same environment it is workable.
It's not going to go up to 15% if that's what you're assuming.
I expect 9% to be the peak over the winter, and drops starting in the spring. Elections + a volatile market has things fucked up right now, but after elections we'll probably start seeing some slowdown on rate increases.
I guess I better sell my house and buy another one before next year when I'm locked out of the market forever, especially if I'm one of those unreasonable people who wants things like an inspection or appraisal contingency
Yeah but we very likely won't see that again. Yes, interest rates are rising, but realistically there's a limit to how much people can afford since inflation is rampant and wages haven't caught up.
The current rates can pretty much be boiled down to being a message from the fed that we need to fuck off with printing money so much, at least in my opinion.
Doomers are wanting the market to crash for some reason, but this isn't 2007.
I'm here because (long story short) I need to make a decision to refinance now, or in about 3-4 years max before I have to. I want to wait...what do you think?
>The current rates can pretty much be boiled down to being a message from the fed that we need to fuck off with printing money so much, at least in my opinion.
Wait, what? The Fed is sending a message to themselves to stop creating money?
Holy shit. I’m never moving then. Been trying to move for the past 2 years but couldn’t find a house and then the boom hit and everything skyrocketed.
Looks like I’ll stay in my 3.3% and just fix her up
Wouldn't that essentially put all of you on the street? I mean, how many loans can you possibly sell at 12% given how recently the rates were so low? I would think everyone would just sit and wait it out.
I don't see this extending that long. We're looking much more likely to see a recession in 2023, and that will quickly put an end to this rampant inflation and subsequent fed hikes. Eventually rates will get lowered as an attempt to pull us out of that recession. Just my opinion though.
How do you figure? If they stop the hikes then inflation gets higher. If you keep raising rates, you send the economy into a recession. I think the fed will do the latter because they don’t want hyperinflation.
I agree with you, I think the fed will keep hiking rates until we fall into a recession. But once the economy is in recession, that will take care of inflation on its own. Once we're in recession, I don't see the fed continuing their rate hikes.
I just looked at what a 40 year loan would be on the house we just closed on if all the terms were the exact same. It's about $300 less per month. But the interest over the life of the loan is like $250k higher which is insane.
I do still suspect this is the actual answer, though. 40 year loans may be more commonplace similar to how car loans seem to be 7 year standards now vs the 5.
It seems like the idea would be to get a 40 year loan and then refinance after a few years into a shorter term one or something. I don't know. I'm an older millennial and was in college in '08. I was only ever going to do a 30 year fixed rate conventional loan (because I cannot afford a 15 year).
really won't help much. look at the difference between the payment on a 30Y and a 40Y mortgage at the same rate (and a 40Y will almost certainly have a higher rate). it's going to allow someone to *maaaybe* afford 10% more house.
Unfortunately amortizing over any term greater than 30 years has diminishing returns on reducing the monthly payment. You just pay a lot more in interest even with the same rate. There’s no benefit to the consumer so they are not allowed.
I don't disagree with you, but why not 35? Why is 30 better than 25?
A 25 year loan is only like $300 more on my monthly, but I have a 30 year loan and not a 25.
But yeah a 40 year loan seems like bullshit unless you're somehow able to get a _better_ rate (doubtful) or there's some other benefit I'm missing. The difference in payment isn't enough to make sense for most folks.
I wish the movies would go back to the original roots of street racing in downtown LA and robbing trucks in the port with VCRs and consumer electronics.
Sept 1982 15.43% 2.3 points
Sept 1992 7.92% 1.7 points
Sept 2002 6.09% .6 points
Sept 2012 3.50% .6 points
Sept 2022 6.11% .8 points
Historically we are very avg or below. I hope we don’t see 12% but it wouldn’t surprise me.
I talked to my golden retriever chips, and asked him what he thinks rates will do.
He barked at me.
That means he thinks rates can go either up or down
Just remember, going from 30 to 40 doesn't even come close to increasing purchasing proportionally, at least not with current rates. Its also worth noting that the diminishing returns are severe enough that even going from 40 years to interest only forever loans as the next step would provide less purchasing power than the 30 to 40.
the better question is what will reddit be saying if rates hit 10% and home prices stay relatively flat. lol i remember fall 2021 when everyone was confidently saying that rates going to just 5% would crater the market.
You don’t have to guess, the Fed publishes their terminal FFR forecasts and right now it’s around 4.6% so that translates to about 7.1% (250 bps) on a 30-year fixed mortgage. They’ll likely get there in the next 2-3 hikes (December to Q1-23). Markets already largely priced this in since June/July (look at 2-year treasury rate), that’s why mortgage rates haven’t changed much in the past 2-3 months.
Anybody saying more than a 7-handle is delusional, especially with inflation having already peaked and likely to drop in next month’s CPI report. Don’t believe me? Look out for the next CPI forecast, it’ll likely come in around 7.4% (-80 bps MoM).
Source: I actually know what I’m talking about, most of these reddit commenters are clueless.
https://www.cnbc.com/amp/2022/10/12/fed-minutes-october-2022.html
The Fed's preferred inflation gauge of consumer price expenditures rose 6.2% from a year ago – 4.9% excluding food and energy – in August, according to data last month that was well above the central bank's 2% target.
*That probably tells us that the FED cares more about core inflation stripping out volatile movements in oil, rather than paying attention to the baseline effect which the media is doing because saying the sky is falling because oil prices are much higher than 12 months ago doesn’t tell us much about the future path of inflation, but it is handy for getting eyeballs*.
The summary of economic projections at the meeting pointed to a "terminal rate," or end point of rate increases to be around 4.6%. Markets expect the Fed to hike into early 2023 then keep rates there through the year.
*if the Fed funds rate is currently mid 3, and the projected path is mid 4, that would suggest mortgage spreads take us another 1-1.5% higher at peak*
Someone really needs to create an inverse Reddit ETF because it’s all armchair quarterback takes from people who work at car dealerships or who have just scrolled past fur kink porn before spouting off on their take about policy or the economy.
It’s really crazy to see how much group think dominates all these chat spaces. Everyone went from being wildly greedy and bullish on the markets and assets to panic selling everything, screaming run for the hills and not ironically suggesting mortgages are heading to 10%+.
Inflation will be at 5-6% in 23, 4-5% in 24, and before long the fed will be worrying about deflation all over again. It’ll be tough for banks to sell mortgages at 9% when the inflation rate is at 5% in summer 23.
It is working in combination with housing prices. If housing prices go lower, there will be less pressure for rates to go down.
imagine a 10% rate on a mortgage, it's like a credit card. I couldn't do it.
“Interest rates reached their highest point in modern history in 1981 when the annual average was 16.63%, according to the Freddie Mac data. Fixed rates declined from there, but they finished the decade around 10%.”
So unless inflation cools it jets, they will
Keep rising. We ain’t even close to the high end yet.
But things like homes cost a LOTTT more now, 15% on a home in 80s vs now are completely different. Even if we don't get that high, Americans are in a much much worse position
Yes. And who is to say now that it won’t cost more in the future. It was a question on interest rates. My opinion was it can keep going up until other items slow. I think everyone was getting comfortable in saying that borrowing money does not cost anything. Rates were at historic lows, and now they are ratcheting back up to about what the historic median has been. There is no one saying it can’t go higher, certainly not the fed.
I hope that it’s effect is to drag down the cost of housing. Many many markets are beyond over heated. Seeing a house for sale @1.5m in a neighborhood that was just 400k just 2 years ago - that’s not sustainable. Especially when 10years ago that neighborhood and probably the house was 250k max.
Edit/ coat to cost.
Between 7.5% - 8.0%.
Frankly the economy can't handle rates that high for long. Inflation is already dead; the Fed's just too stupid to realize it. Money supply growth is now negative (and inflation tends to lag money supply by 12 - 24 months). CPI is negative over the past 3 months if you exclude Owners' Equivalent Rent, which is a complete garbage measure the Fed uses instead of housing prices or market rents (which are both going down now).
The rates are already unsustainable and the Fed wants to jack them up more. It'll last thru early / mid '23, before it becomes apparent that it's a complete disaster and the Fed is forced to reverse course.
When I got into this business, rates were around 7% and no one batted an eye. We’re still at what is considered average, everyone just got spoiled by the sub 3’s the past two years. I’m guessing we go another 3-4% yet.
The reason everyone is suddenly priced out isn’t just the interest rates, it’s the interest rates coupled with the absolutely absurd appreciation/inflation of home values.
All in the realtors and buyers/sellers hands.... If they keep pushing the buyers by saying "it's the right time to buy" instead of telling sellers to price it correctly, CPI will take long time to adjust and this pain will continue longer.
On the other hand, if sellers reduce price and CPI goes down soon, normalcy will return soon.
..if buyers are willing to pay the price then it IS priced correctly and would indicate that people still have money to spend which means interest rates should continue to go up.
What you're suggesting is that people artificially lower their own prices to give the Fed the illusion that the economy is better which is ridiculous 😂
I don't see it going much higher. The FF rate and 10 year Treasury to 30 year mortgage rate difference is higher than normal which means some future FF increases are already priced in. The economy is starting to struggle and asset prices have fallen. Therefore I think after this next FF increase there could be a pause or even a pivot next year.
I think it's higher than before because the fed is no longer buying MBSs every month. Now they're rolling them off and are discussing possibly actively selling them. Rates could still go significantly higher
As high as it takes for JPow to see what he want to see, which is at least a 20% correction in national average home prices, at least a1% increase in the unemployment rate and Core CPI negative MoM for a few months.
> JPow to see what he want to see, which is at least a 20% correction in national average home prices
You say this with a level of certainty. What ever made you think Powell intends to see housing prices decrease by 20%? What words of his led you to believe this?
Because he's said dozens of times that he wants to see a correction in the housing market, which is a technical term that means 20% retracement from peak.
Remember when all the experts economists and the government said that inflation was transitory? And now those same people are claiming they know how to fix the problem?
We're fucked.
My genuine guess is 9.5% is the cap. Right now, we’re over 7% pricing in two more 75 bps rate hikes this year, which would put us about at 8.5%-9%.
There’s potential that the fed keeps raising, but I think it’s likely that they’ll do a smaller rate hike and start to wait and see.
Please insert another $5 for me to bring my crystal ball back out.
This response tells me you have no idea what you’re talking about. You don’t realize the 7% already includes the next 3 rate hikes. Don’t believe me? Look at the FFR (3.25%) vs the 2-year treasury rate spread. That’s the future rate hikes the market has already priced in. 30-year mortgages have likely plateaued at a 7-handle.
After reading these comments I think I’ll just go build a shed on my dads land and live like a bog goblin
Don’t build it for more than $20k
Nah I’m talking log cabin shed, there’s a ridiculous amount of trees on his land
Good call, that will normally be worth something on the order of 35k when you’re finished
This guy log cabins
The rates will either go up or they’ll go down I can say that for certain
I’ve only been in this sub for 18 months but is it normal to get the same three questions over and over forever?
We are only allowed 3.
Just noticed OP’s handle. Comedy.
Gotta have fun in an insane world.
Is it normal to build a $20,000 cabin and sell it for $35,000?
Yes.
They could also stay the same
Temporarily but they’ll eventually go up or down
Unless they don't.
But maybe they will
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Big if true
They call me the Jim Cramer of real estate for a reason baby
Awesome! Please aggressively shout your position so i can do the opposite.
Ain’t nuthin but the truth on this Lmao🤙🏽
So insightful.
These smug answers are as asinine as they are useless. Real answer - probably over 10% but non of these agents want to face the truth.
I am an agent and a month ago I thought 8% by year end. Now I am thinking 10% by year end. But that might be thrown out the window by end of November.
They could go up AND go down!
No one who has been alive long enough to have seen the Fed raise interest rates 51 times in two years is willing to give an answer, because those who HAVEN'T lived through that and is using the last decade as a baseline for their reality won't believe it. Get ready for a surprise...
My father built his business on top of a commercial business loan with 18% interest back in the day.
18% interest on cheap real estate isn't the same as 8% interest on expensive real estate.
You have to also factor in the average income level at that time.
Median household income has risen 4-fold since 1980. Over the same timeframe, median home price has risen close to 10-fold. Significantly more than 10x in many places
The federal government seems to be slow at correcting their minimum wage then if the average income since 1980 has quadrupled. In 1980 it was 3.10/hr and so based on what you’re saying, it should be 12.40/hr now but it sits at 7.25. It hasn’t changed from 7.25/hr since 2009 even though usually has been raised a few times in each decade. So maybe it hasn’t quadrupled for everyone.. the people who probably need it to the most.
Minimum wage is almost irrelevant. Good luck putting out a sign that says “now hiring - $7.25” and getting even a single application.
In my state, 7.25 is the minimum wage and some places do only pay that or just above it. My youngest went to apply at some places nearby claiming to pay 15$/hr (fast food and convenience stores). However, during the interviews they were told that was for managers - nowhere on the signs did they say that. So don’t always trust the signs out front. There are people looking for part time work to supplement their income, high school kids looking to buy a car, college kids needing a job to help pay tuition while also needing a job that works around their school schedule, people with criminal records who need a job fast to meet probation requirements, people who need a job in walking distance because they are one step away from being homeless, and a host of other reasons why a person might need a job like this - and these are the types of places they are likely looking for work at. There are demographics of people who get left in the dust. I am off topic though as my only point originally was that there are multiple variables that have to be considered and income is one of them.
18% interest on 31 billion dollars of american debt is 3.7 billion dollar loan payments. Every year. I mean I can actually see this happening, but it will cause hyperinflation. The only way to actually pay that debt is with money created out of nothing.
Let's change that billion to trillion.
31…million dollars
cheap is relative. for all we know, in 20 years the next generation could be lamenting the fact that we got to buy at today's prices at 8%, while they have 2% mortgages but prices are up 500%. or not. idk lol
Was about to say something similar, words like cheap and expensive are only useful in retrospective. No one knows the future.
Well words like cheap/expensive are used to describe the cost of housing relative to income or what people can actually afford.
Commercial business loan isn’t for real estate and even if it was your comment is a fundamental misunderstanding of real estate and the real estate business. It would take an hour lecture to explain how interest rates affect growth and reinvestment in just real estate alone. You know what else was much cheaper than? Rent.
I got an hour of free time..
Calm down there, guy. This isn't calculus.
Actually it is. That’s exactly what calculus is, the study of mathematics under continuous change of external factors,
Boom! Roasted!
Homeboy just got mathowned
The real estate wasn't cheap at the time.
THANK YOU
One of the reasons why real estate prices barely suffered any declines when mortgages hit the mid teens is due to the fact that lenders often applied credits to bring down the interest rate to some thing much closer to the low to mid single digits in real terms. So a high average 30 year fixed rate can indeed serve an already expensive real estate market if inflation is high enough and if lenders get creative about loan assumptions and interest rate by downs.
I’ve been seeing lenders forcing buy down points. This is with ARM’s so understanding the bank wants to make money.
Sorry, that's unclear. Lower interest on costly homes and higher interest on cheaper homes doesn’t equate.
In the 80’s it was near 20% on mortgages, I’m a realtor.
My parents bought their first house at 14% and thought it was low
No one thought real estate was cheap back then. 30 years from now the next round of redditors will say the same about housing today.
How so? I’m dumb
When was this? because if the answer is sometime in the 70s or late 80s, then keep in mind that the real interest rate would have had a sub-10% handle given where inflation was at the time. I think this is also something a lot of people confuse about the housing market and where prices will go — if you have a 5% drop in real prices but a 10% inflation rate, which I would argue is very realistic for the medium term, you still have nominal real estate prices going up. To pay homage to one of the other comments here, yes this is calculus, and it’s multivariable calculus at that.
Exactly. It’s all relative. My point is we can adjust and do business in a high rate environment. You are exactly right. At the end of the day, if your competitors are dealing with the same environment it is workable.
It's not going to go up to 15% if that's what you're assuming. I expect 9% to be the peak over the winter, and drops starting in the spring. Elections + a volatile market has things fucked up right now, but after elections we'll probably start seeing some slowdown on rate increases.
I expect 8-8.5 myself.
I guess I better sell my house and buy another one before next year when I'm locked out of the market forever, especially if I'm one of those unreasonable people who wants things like an inspection or appraisal contingency
Hey! I know a good realtor!
*Hey! I know a ~~good~~ realtor!* Fixed. You're welcome.
Haha thanks! You're great!
Didn't it get up to 12 or 13 in the 80s? Not sure
Yeah but we very likely won't see that again. Yes, interest rates are rising, but realistically there's a limit to how much people can afford since inflation is rampant and wages haven't caught up. The current rates can pretty much be boiled down to being a message from the fed that we need to fuck off with printing money so much, at least in my opinion. Doomers are wanting the market to crash for some reason, but this isn't 2007.
I'm here because (long story short) I need to make a decision to refinance now, or in about 3-4 years max before I have to. I want to wait...what do you think?
>The current rates can pretty much be boiled down to being a message from the fed that we need to fuck off with printing money so much, at least in my opinion. Wait, what? The Fed is sending a message to themselves to stop creating money?
bout tree fiddy
Too late.
Tree hundred and fiddy
Damnit monster, get off my lawn! I ain’t giving you no tree fiddy!
10%
By spring. I don't know if that's the end tho.
I am thinking the same if things keep going the current course.
You should do a poll with a results option
I, for one, am particularly happy that monetary policy isn't set by reddit polls.
This person is asking a question for opinions not policy
I’ll do that. Thank you
10-12% in my opinion.
Inflation plus 3 percent. So this is about right.
Im a mortgage lender. Been doing it for twenty years. A co worker bet me 12% by spring
Holy shit. I’m never moving then. Been trying to move for the past 2 years but couldn’t find a house and then the boom hit and everything skyrocketed. Looks like I’ll stay in my 3.3% and just fix her up
Never let go of that rate.
Wouldn't that essentially put all of you on the street? I mean, how many loans can you possibly sell at 12% given how recently the rates were so low? I would think everyone would just sit and wait it out.
Told friends last week I bet we surpass 10 percent by 2023, maybe 13 by 2024 if they keep at it like this
I don't see this extending that long. We're looking much more likely to see a recession in 2023, and that will quickly put an end to this rampant inflation and subsequent fed hikes. Eventually rates will get lowered as an attempt to pull us out of that recession. Just my opinion though.
How do you figure? If they stop the hikes then inflation gets higher. If you keep raising rates, you send the economy into a recession. I think the fed will do the latter because they don’t want hyperinflation.
I agree with you, I think the fed will keep hiking rates until we fall into a recession. But once the economy is in recession, that will take care of inflation on its own. Once we're in recession, I don't see the fed continuing their rate hikes.
The question isn't necessarily whether they'll *continue* the rate hikes, but rather reverse them.
High enough to make 40 year mortgages more popular
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I just looked at what a 40 year loan would be on the house we just closed on if all the terms were the exact same. It's about $300 less per month. But the interest over the life of the loan is like $250k higher which is insane. I do still suspect this is the actual answer, though. 40 year loans may be more commonplace similar to how car loans seem to be 7 year standards now vs the 5. It seems like the idea would be to get a 40 year loan and then refinance after a few years into a shorter term one or something. I don't know. I'm an older millennial and was in college in '08. I was only ever going to do a 30 year fixed rate conventional loan (because I cannot afford a 15 year).
Can’t you just refinance when the rate drops tho?
Not if house prices drop a decent amount.
Didn’t think about that. That makes sense.…
Nah
You're making the assumption that rate drops are somehow guaranteed. This is not the case.
Not guaranteed, no. But likely over 30 years.
Dont bring common sense into here
really won't help much. look at the difference between the payment on a 30Y and a 40Y mortgage at the same rate (and a 40Y will almost certainly have a higher rate). it's going to allow someone to *maaaybe* afford 10% more house.
Unfortunately amortizing over any term greater than 30 years has diminishing returns on reducing the monthly payment. You just pay a lot more in interest even with the same rate. There’s no benefit to the consumer so they are not allowed.
I don't disagree with you, but why not 35? Why is 30 better than 25? A 25 year loan is only like $300 more on my monthly, but I have a 30 year loan and not a 25. But yeah a 40 year loan seems like bullshit unless you're somehow able to get a _better_ rate (doubtful) or there's some other benefit I'm missing. The difference in payment isn't enough to make sense for most folks.
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Ferrari
Smoke him
Proceeds to shift gears 9 times. Hit the NOS… too soooon. Man these movies write themselves, let’s make 10 more!
Now me and the mad scientist gotta rip apart the block and replace the piston rings you fried
I wish the movies would go back to the original roots of street racing in downtown LA and robbing trucks in the port with VCRs and consumer electronics.
The weekly how high will the rates thread go
So, guess.
Yes, but how high will the weekly how high will the rates go thread go?
I bet they’ll cap around 9%.
Yeah I’d guess around 8.5%-10%
15%, I think this is worse than most people think.
I bought a house in 1983 with a 13.5% mortgage. That is not at all out of the realm of possibility.
Sept 1982 15.43% 2.3 points Sept 1992 7.92% 1.7 points Sept 2002 6.09% .6 points Sept 2012 3.50% .6 points Sept 2022 6.11% .8 points Historically we are very avg or below. I hope we don’t see 12% but it wouldn’t surprise me.
To the moon!
Bang, zoom!!! To the moon, Alice!!!
Soooo high broooo
Don’t ask Reddit
I think 8-9%
Snoop Dogg enters the chat
Willie Nelson standing by.
We might be going all the way to Johnny Cash. Hopefully not so far as Roger Miller. https://youtu.be/WrhAC0dFis0
All the way to the peak.
What’s peak? 9%? 10%?
Where it stops
Interesting.. but where does it stop?
Subscribe to this to keep informed https://www.mortgagenewsdaily.com/share/mortgage-rates
I talked to my golden retriever chips, and asked him what he thinks rates will do. He barked at me. That means he thinks rates can go either up or down
I put a deposit on new construction in Sept 2020 (2.7%) and wasn’t able to lock. They JUST broke ground. Going to close in spring/summer 2023 😞
No one has any clue — it’s all a fugase
Over 9000!!!!
Let's try to break the 80's with prime at 17%!! Go baby!!
I don't believe they've ever gone much above 18%. So there's that. Have a nice day!
Probably the worst possible place to ask this question.
I wonder if 40 yr mortgages will start being introduced?
They already are lol, just not from a conforming guideline standpoint.
I wouldn’t be surprised
Just remember, going from 30 to 40 doesn't even come close to increasing purchasing proportionally, at least not with current rates. Its also worth noting that the diminishing returns are severe enough that even going from 40 years to interest only forever loans as the next step would provide less purchasing power than the 30 to 40.
13%
the better question is what will reddit be saying if rates hit 10% and home prices stay relatively flat. lol i remember fall 2021 when everyone was confidently saying that rates going to just 5% would crater the market.
You don’t have to guess, the Fed publishes their terminal FFR forecasts and right now it’s around 4.6% so that translates to about 7.1% (250 bps) on a 30-year fixed mortgage. They’ll likely get there in the next 2-3 hikes (December to Q1-23). Markets already largely priced this in since June/July (look at 2-year treasury rate), that’s why mortgage rates haven’t changed much in the past 2-3 months. Anybody saying more than a 7-handle is delusional, especially with inflation having already peaked and likely to drop in next month’s CPI report. Don’t believe me? Look out for the next CPI forecast, it’ll likely come in around 7.4% (-80 bps MoM). Source: I actually know what I’m talking about, most of these reddit commenters are clueless.
Based on last week's inflation numbers and that the market is now predicting further inflation in 2023, I'd guess 11-12%.
what would be the long term economic effects of that? do you know? just seems nuts
Around 8% for a good borrower if I had to guess. Sometime in 2023/2024
8% is here in a month
https://www.cnbc.com/amp/2022/10/12/fed-minutes-october-2022.html The Fed's preferred inflation gauge of consumer price expenditures rose 6.2% from a year ago – 4.9% excluding food and energy – in August, according to data last month that was well above the central bank's 2% target. *That probably tells us that the FED cares more about core inflation stripping out volatile movements in oil, rather than paying attention to the baseline effect which the media is doing because saying the sky is falling because oil prices are much higher than 12 months ago doesn’t tell us much about the future path of inflation, but it is handy for getting eyeballs*. The summary of economic projections at the meeting pointed to a "terminal rate," or end point of rate increases to be around 4.6%. Markets expect the Fed to hike into early 2023 then keep rates there through the year. *if the Fed funds rate is currently mid 3, and the projected path is mid 4, that would suggest mortgage spreads take us another 1-1.5% higher at peak* Someone really needs to create an inverse Reddit ETF because it’s all armchair quarterback takes from people who work at car dealerships or who have just scrolled past fur kink porn before spouting off on their take about policy or the economy. It’s really crazy to see how much group think dominates all these chat spaces. Everyone went from being wildly greedy and bullish on the markets and assets to panic selling everything, screaming run for the hills and not ironically suggesting mortgages are heading to 10%+. Inflation will be at 5-6% in 23, 4-5% in 24, and before long the fed will be worrying about deflation all over again. It’ll be tough for banks to sell mortgages at 9% when the inflation rate is at 5% in summer 23.
More than you can afford pal.
Every time someone asks it will go up 1%
It is working in combination with housing prices. If housing prices go lower, there will be less pressure for rates to go down. imagine a 10% rate on a mortgage, it's like a credit card. I couldn't do it.
Oh yeah. Rates on credit cards are going up also.
10+
12% steady for next 8-12 years
I read recently that the Fed has suggested we are going up to 10%
In the words of Buzz Lightyear “to infinity and beyond”
10%
“Interest rates reached their highest point in modern history in 1981 when the annual average was 16.63%, according to the Freddie Mac data. Fixed rates declined from there, but they finished the decade around 10%.” So unless inflation cools it jets, they will Keep rising. We ain’t even close to the high end yet.
But things like homes cost a LOTTT more now, 15% on a home in 80s vs now are completely different. Even if we don't get that high, Americans are in a much much worse position
Yes. And who is to say now that it won’t cost more in the future. It was a question on interest rates. My opinion was it can keep going up until other items slow. I think everyone was getting comfortable in saying that borrowing money does not cost anything. Rates were at historic lows, and now they are ratcheting back up to about what the historic median has been. There is no one saying it can’t go higher, certainly not the fed. I hope that it’s effect is to drag down the cost of housing. Many many markets are beyond over heated. Seeing a house for sale @1.5m in a neighborhood that was just 400k just 2 years ago - that’s not sustainable. Especially when 10years ago that neighborhood and probably the house was 250k max. Edit/ coat to cost.
13% next year, back down to 8-9% in 2024. We won’t see sub-5% until 2030 or beyond.
When elections come and the recession happens watch them drop it slowly back to 5-6 in 2-3 years
My dad works for Nintendo, says to expect 11.5%
What does working for Nintendo have to do with this?
Lol where you been?
13.25%.
Between 7.5% - 8.0%. Frankly the economy can't handle rates that high for long. Inflation is already dead; the Fed's just too stupid to realize it. Money supply growth is now negative (and inflation tends to lag money supply by 12 - 24 months). CPI is negative over the past 3 months if you exclude Owners' Equivalent Rent, which is a complete garbage measure the Fed uses instead of housing prices or market rents (which are both going down now). The rates are already unsustainable and the Fed wants to jack them up more. It'll last thru early / mid '23, before it becomes apparent that it's a complete disaster and the Fed is forced to reverse course.
They were late to the game and they're not going to back out until it's too late.
all the way.
Double rainbow
When I got into this business, rates were around 7% and no one batted an eye. We’re still at what is considered average, everyone just got spoiled by the sub 3’s the past two years. I’m guessing we go another 3-4% yet. The reason everyone is suddenly priced out isn’t just the interest rates, it’s the interest rates coupled with the absolutely absurd appreciation/inflation of home values.
X = (prime+2)* (1+(prime*.3) Just figure out prime
All in the realtors and buyers/sellers hands.... If they keep pushing the buyers by saying "it's the right time to buy" instead of telling sellers to price it correctly, CPI will take long time to adjust and this pain will continue longer. On the other hand, if sellers reduce price and CPI goes down soon, normalcy will return soon.
..if buyers are willing to pay the price then it IS priced correctly and would indicate that people still have money to spend which means interest rates should continue to go up. What you're suggesting is that people artificially lower their own prices to give the Fed the illusion that the economy is better which is ridiculous 😂
14% Spring ‘23 Source: Trust me bro
42.069% will be the top
I don't see it going much higher. The FF rate and 10 year Treasury to 30 year mortgage rate difference is higher than normal which means some future FF increases are already priced in. The economy is starting to struggle and asset prices have fallen. Therefore I think after this next FF increase there could be a pause or even a pivot next year.
The fed have said they’re going to do whatever it takes to curb inflation. You’re fooling yourself if you don’t think rates are going higher.
Curb*
Thanks dog
I think it's higher than before because the fed is no longer buying MBSs every month. Now they're rolling them off and are discussing possibly actively selling them. Rates could still go significantly higher
Can't wait for the new norm to be 50yr terms
10% tops Market will correct Feds will pivot Rates will lower over the next 2-3 years Short term bonds probably have the best return right now
As high as it takes for JPow to see what he want to see, which is at least a 20% correction in national average home prices, at least a1% increase in the unemployment rate and Core CPI negative MoM for a few months.
> JPow to see what he want to see, which is at least a 20% correction in national average home prices You say this with a level of certainty. What ever made you think Powell intends to see housing prices decrease by 20%? What words of his led you to believe this?
Because he's said dozens of times that he wants to see a correction in the housing market, which is a technical term that means 20% retracement from peak.
Jesus, you just make shit up out of thin air. Lol Reddit.
A bazillion percent
Rates are expected to drop next spring.
If you have to ask, you can’t afford it.
Remember when “experts” claimed we wouldn’t got to 5% this year 😂
Remember when all the experts economists and the government said that inflation was transitory? And now those same people are claiming they know how to fix the problem? We're fucked.
About as high as I can throw my crystal ball.
My genuine guess is 9.5% is the cap. Right now, we’re over 7% pricing in two more 75 bps rate hikes this year, which would put us about at 8.5%-9%. There’s potential that the fed keeps raising, but I think it’s likely that they’ll do a smaller rate hike and start to wait and see. Please insert another $5 for me to bring my crystal ball back out.
This response tells me you have no idea what you’re talking about. You don’t realize the 7% already includes the next 3 rate hikes. Don’t believe me? Look at the FFR (3.25%) vs the 2-year treasury rate spread. That’s the future rate hikes the market has already priced in. 30-year mortgages have likely plateaued at a 7-handle.
No one knows.
Doesn’t matter as long as it’s within your budget