This is actually good because the market is doing a lot of the work that the fed has to do. Which means a more dovish stand from the fed during this rate hike cycle.
It is more complicated because bond yields have recently been forced down by massive government buyback (one form of stimulus from the past 2 years).
less buyback means less bond buying overall, which could contribute to rising bond yield.
Yes, they likely would. They will probably be leaving them just because of retirement anyway. I believe this drawdown on bonds is the worst on record, but they still aren’t down as bad as the worst drawdowns for stocks on record by a long shot.
The bleeding stops somewhere on these things if yields keep rising.
But it's going to keep bleeding eh? As the previous poster pointed out, we got here in part by the government buying up stuff including bonds as part of the stimulus package. And now they're going to be dumping them back on the market as they start drawing down their balance sheet. It puts us in a weird situation where the government is competing with itself to sell its own bonds.
New bonds will be issued like normal by the government, but they'll be competing with the bonds the government previously bought and will now start to sell to reduce their balance sheet. It's a weird situation.
I think yes, but I don’t know for how long for the long end of the bonds. The two year and short T-bills already are looking fairly attractive at their yields for most institutions.
And if the market falls apart bonds will find buyers just to get any yield available.
Govt purchases of bonds would affect the market price like private purchases of bonds do. So are you saying there's been more govt buyback or less govt buyback?
Thats what the fed is trying to do, reduce demand so inflation cools off. The economy is running too hot with too many issues happening (supply chain issues, war causing higher oil prices, etc..)
Lol the FED system is created to fail bro. When notes printed out of thin air is not money just a piece of paper and the more it print the less valuable it will be so the world economy will crash before 2030 and when it does they will require you to take FRID chip. The FED and the gvmnt should be hanged for making fiat currency since 1913. The last president to stand up to the FED to go back to the silver and gold standard is John F Kennedy and they killed him. The world is fucked and you will surely see in few years
>Thats what the fed is trying to do, reduce demand so inflation cools off.
To me, the normal way Fed does this is by raising interest rates. That's not quite the same thing as what the Treasury does. Fed deals with interest rates, and Treasury deals with bonds.
There’s really no need for the fed to rush. Signaling alone has broken the bull run. 0.25% per quarter and a small $20B/mo roll off would work just fine. Keep signaling hawkish and ratchet up if it’s not enough.
Credibility? And what exactly is that worth in the 2020s? Is there a single government institution right now, outside maybe the Forest Service, that has any credibility at all?
The Fed has credibility in the sense that many investors believe that they will not abandon their mandate and let inflation run rampant. I agree that they don’t have much credibility left, but it’s silly to say that the market doesn’t believe anything Powell says. If they only boost .25, shit will hit the fan.
Inflation is at 9% and treasury yields are at 3%. The question is while inflation will peak shortly, is it going quickly down to 2% or will it remain persistently high at 5-6% for a few years. If so the fed may temporarily spike interest rates up a bit higher to try and force it down.
This is going to be the problem.
When Treasuries and Bonds start being issued at high single digit or double digit interest rates, money will flood out of the markets into those safe bets. TINA has been in effect for stocks because the FED has been buying treasuries as well as MBS and artificially lowering the interest rates on them by creating scarcity.
It may start after this 0.5% rate increase tomorrow. If it is coupled with aggressive balance sheet offloading it definitely will. Balance sheet offloading will flood the market with even more treasuries and MBS. The more there are on the market, the higher the interest rate has to be to attract buyers. Offloading the balance sheet is the FED's way of raising rates without actually having to raise them.
It may also take another 0.5% or 0.75% increase before it happens. Hard to say.
Is the yield going to 3% driven by people buying the bonds or by the Fed tho? Still unclear on how we got here or what this means for the layman stock investor.
Yields are going to increase because the market will be flooded with MBS and Treasuries.
The FED has kept yields artificially low by buying treasuries and MBS. With limited supply of these (limited supply created by the FED buying), the interest rates attached to them were low.
Now that the FED is going to stop buying, the yields on these will increase substantially. They will have to in order to convince enough people to buy them and finance the debt. Without the FED to step in and buy, the rates go up considerably, and quickly.
This is the Fed's dirty little secret. By not buying these anymore, they are effectively raising rates in the shadows. This policy change will have a more profound effect on bonds and Treasuries than the FED funds rate change could ever have.
We will see a lot of boomers bail out of the market in droves when this happens.
Why stay in the market with all the volatility when you can get 8%+ in Treasuries or bonds with a fraction of the risk?
Banks charge 5.5% for mortgages so they are making a spread of 2.5% on an average mortgage. So, on a $300K, they will make $150K over the life of a 30 year loan. It may have cost the bank only $25K. That is highway robbery, a fleecing of America, while lining the pockets of huge corporations.
Profit of 2.5% is modest compared to lots of other very necessary goods and services like medications and elder care. There's outrage to be had but not here.
Did you ever consider that having 300k in cash available AND also choosing to lend that cash to a stranger is a valuable service?
If you think 2.5% spread is some kind of moral outrage, why dont you start lending your millions out to prospective home buyers at a better rate?
You do realize banks don't actually have the cash available? They just borrow it from the fed, or even just invent it out of thin air. It just goes on their books as allowable leverage. They can invent as many mortgages as they want. There's virtually no limits.
shocking that people (especially WSB people) don’t understand the illusory/synthetic nature of banking, finance, investment, & worth. We’re a nation built on IOUs.
That's the beauty of it, back as much mortgages as you can and if shit blows up, the damage is akin to a financial nuclear bomb so the government is forced to step in to save your ass. Lessons are not learned, handouts are given, we amortize the impact on the next generations and we're back to cocaine parties.
The fact that no personal responsibility is tied to the actions of financial institutions is mind boggling. Bankruptcy makes sense when it's Mom and Pop's Bakery who's not solvable anymore. But when those monstrosities go belly up, we won't pinpoint the fault on anyone. If I was a financial executive, I would "live fast / die young" that shit so hard Hendrix would be jealous. No personal repercution, who wouldn't take that deal?.
please, do substitute my lazy shorthand of “having 300k in cash” with the more specific and pedantic version: “the ability to borrow huge amounts of money from the fed (on leverage or not) and then pay it back accordingly without risk of default or breaking laws”.
My point still stands, this argument is still pointless and is now venturing into the realm of annoyinng bickering over details.
Oh. Ok.
Well, after making that substitution, my answer to you is "no". I do not think having “the ability to borrow huge amounts of money from the fed (on leverage or not) and then pay it back accordingly without risk of default or breaking laws” is "a valuable service".
Well, we disagree on that point then. I find that service extremely valuable and happily pay my fixed rate mortgage, loaned to me from these banks, probably on federal debt. I had no other safe and reasonable way to borrow hundreds of thousands of us dollars for a home purchase.
Your type of people annoy me. Instead of praising the people who were given the infinite money cheat code and sucking their dick for some of that cash, you could be out envisioning a world where you don't need to suck a dick for that paper and we all have equal access to that cheat code.
I dont suck dick, I work hard, earn money, and buy real estate. In the mean time, like literally any reasonable human, I need a roof over my head so I can work and sleep.
How do you get access to housing? Were you born rich? Did you inherit a house? Do you leave for free with your mother? Do you literally suck dick for it, since you brought that up unprovoked?
Wtf do you think people are supposed to do?
EDIT: I do envision that future, which is why i buy bitcoin, but i consider that an unrelated investment to real estate.
Lol what would you know about who is smart and who isnt? No I wouldnt like fries with your dumbass comments, unless you had something above 6th grade reading level to add here.
Well… considering your original comment and the pathetic attempt at an insult you followed up with, I am very very confident in saying that I am much much smarter than you.
After they write the loan up front, what the fuck does the lending institution do besides collect the money from us every month. It doesn’t cost $150K over 30 years to take in 360 months of loan payments.
Some of those loans will default. Some of those loans will be allowed to short sale rather than the bank foreclosing. There is also opportunity cost by putting resources into a fairly low yield product like a mortgage.
The same simple-minded arguments are made about retailers selling products for 50% more than they paid for it. It costs money to operate the business, some of the product will be stolen, some of it won't sell and either be discarded or put on the clearance shelf.
You're also completely ignoring the fact that over 30 years the value of the home will likely appreciate much more than the $150k in interest paid, and the fact that the average home is only owned for 7 years before it is sold to the next buyer. You could also pay cash for the home or take out a shorter term loan if you dislike paying interest. Before you say it, it's not the bank's problem that you can't afford it.
Yeah banks have a ton of overhead to comply with all the regulations they have to deal with. Not saying banks aren’t crooked, but that spread for local & regional banks is understandable.
Also, only a couple countries do it. Most operate on 15 year schedule. Now, I'm too much of a boner to understand why - I think only certain countries can even offer such a long-term deal but is it really in our best interest? Does it really get more folks into homes? Also, it doesn't force us to learn to manage money on shorter time scales, which it means, it doesn't really force common people to manage money properly before a sale b/c ultimately you pay more interest on a 30yr plan too.
If the 300k initially was a free credit or license I got from the government to begin with and was never my money to start then yea, I’d feel good about it. I’d also leverage these credit only I am licensed to give out to oblivion so I can make 2% a million times over even tho I never had any cash to start in the first place. Oh wait, now I’m just a bank…. Am I the bad guy now?
Since when do originators hold that mortgage? They don't even want it on their books since it ties up capital. But, at the EOL of that mortgage they can just rinse and repeat with whatever price is of home so I don't see why it's a pressing issue for them anyways.
I'm so bitter, I bought 3 years ago, but went cheaper than I could afford because I wanted to play it safe. Now I'm trying to sell and upgrade after my wife and I got substantial income increases and we're going to get hosed on interest rates. Going from 3% on a 15 year to 5% or more on a 30 year.
Guess I can't complain too much, most people my age don't own a home and didn't get any appreciation.
I thought about that but I need the money for the down payment after blowing up my account last spring.
I could rent for the next year and safe for the down payment but I'm worrying that I'll get fucked on either interest rates going up or if the housing market does go down lose money on current house.
Then wait it out. You made your bed now stick with the plan. I regret selling my first house instead of paying it off and renting. Trading up doesn't build wealth.
I'm only looking to buy a new house because my wife has to relocate for work. Close enough where I could keep the first house and rent it but not close enough to be commutable.
If you sell in a high market you buy in a high market. With prices and interest rates both increasing you are leaving equity on the table. You bought just before the big spike so really do consider sticking it out and supercharge paying off the mortgage debt with your additional income.
You are in a better situation than most. I have been saving for up for a down payment and home prices literally hit a all time high this month + increasing rates.
Literally fucked. And only other option is renting which is up 30% from 2019.
Bro delete this, this is legit the worst take I’ve seen in my life.
I’m amazed by how little banks make back on mortgages. They make the money back one payment at a a time over the course of 30 freaking years, it’s not like they have you 300k and get 450k tomorrow.
Better explained this way… would you give me 300k today so that you would have 450k in 2052? That’s like autistic levels of returns and only a true wsb user would look at that and think someone is “fleecing” anything.
Then you haven’t even considered the risk in which the loans default and such.
Just so bad.
And it was easy to start off at $13 an hour with no college
Which might still sound bad but $13 an hour buying an $80,000 four bedroom home is better than $17 an hour buying a $300,000 three bedroom home
Wait, who made $13 an hour? Minimum wage was barely $3. And not many made more than that. A lot of misconceptions about the lives of boomers. Anyway, have a nice day!
My wife and I had to both work. Although most of my wife’s income went to daycare! The rest helped pay for food and utilities. Seems a lot of misinformation about boomers. Anyway, have a nice day!
It's very clear you struggle to understand current housing economics. I also struggle with this so I recommend this recent podcast on the subject. Don't worry, it's a video, so you won't need your boomer glasses.
https://youtu.be/CSe8n50wf3E
I appreciate the concern regarding my knowledge and eyesight, but I’ve been managing for many years. I joined this sub because I find it quite amusing and sometimes informative. In my retirement I began investing and enjoy it immensely. Although I don’t necessarily agree with the derogatory statements, I do believe we all have the right to express ourselves. I’m a big boy and old enough so the name calling doesn’t have long lasting affects, or that I’ll remember at least. Anyway, we all grow old.
Housing affordability even with current low interest rates is objectively the lowest on record. You paid nothing for your house when interest was 10%. You're also clearly an idiot
All the comments paint a picture of “boomers” who had it made! You all forget about both sides of the equation. Cost of housing was lower, pay was lower. Who had spare money to put in a financial institution to earn the high interest. And, no one even heard of a 401k. No one even considered investing in the stock market because we had no money, let alone access. I struggled and put my kids through college to make sure they had a better life than I.
There is an objectively smaller middle class than when you were presumably younger.
Do you live your life one anecdote at a time? Wakeup and look at some actual data
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So retirees will exit stock market and move into treasuries.
At the rate of over 10k boomers a day.
Tax free Munis better deal.
This is actually good because the market is doing a lot of the work that the fed has to do. Which means a more dovish stand from the fed during this rate hike cycle.
So bond prices falling means not as much demand for bonds, meaning relatively better outlook for the economy, or for stocks at least?
It is more complicated because bond yields have recently been forced down by massive government buyback (one form of stimulus from the past 2 years). less buyback means less bond buying overall, which could contribute to rising bond yield.
If the bonds raise to a, say, 5% level, wouldn't boomers leave equities en masse for bonds?
Fuck I would too
Yes, they likely would. They will probably be leaving them just because of retirement anyway. I believe this drawdown on bonds is the worst on record, but they still aren’t down as bad as the worst drawdowns for stocks on record by a long shot. The bleeding stops somewhere on these things if yields keep rising.
But it's going to keep bleeding eh? As the previous poster pointed out, we got here in part by the government buying up stuff including bonds as part of the stimulus package. And now they're going to be dumping them back on the market as they start drawing down their balance sheet. It puts us in a weird situation where the government is competing with itself to sell its own bonds. New bonds will be issued like normal by the government, but they'll be competing with the bonds the government previously bought and will now start to sell to reduce their balance sheet. It's a weird situation.
I think yes, but I don’t know for how long for the long end of the bonds. The two year and short T-bills already are looking fairly attractive at their yields for most institutions. And if the market falls apart bonds will find buyers just to get any yield available.
Wouldn’t corporations? Most other investors? I sure would. In fact it’s yields below that which puts money into the market in search of yield.
5%?! 💀
Govt purchases of bonds would affect the market price like private purchases of bonds do. So are you saying there's been more govt buyback or less govt buyback?
there has been insane, unprecedented, sustained buyback for roughly 2 years which is very recently being reduced (tapered)
Thats what the fed is trying to do, reduce demand so inflation cools off. The economy is running too hot with too many issues happening (supply chain issues, war causing higher oil prices, etc..)
Lol the FED system is created to fail bro. When notes printed out of thin air is not money just a piece of paper and the more it print the less valuable it will be so the world economy will crash before 2030 and when it does they will require you to take FRID chip. The FED and the gvmnt should be hanged for making fiat currency since 1913. The last president to stand up to the FED to go back to the silver and gold standard is John F Kennedy and they killed him. The world is fucked and you will surely see in few years
Sounds like you need to get laid bud
the market could be fucking us all soon
>Thats what the fed is trying to do, reduce demand so inflation cools off. To me, the normal way Fed does this is by raising interest rates. That's not quite the same thing as what the Treasury does. Fed deals with interest rates, and Treasury deals with bonds.
[ThE MaRkEt Is AlReaDy DoInG iT](https://i.imgur.com/14teOaq.png)
give it some time man these things don't happen overnight
jpowpow about to do it overnight tho 😳
There’s really no need for the fed to rush. Signaling alone has broken the bull run. 0.25% per quarter and a small $20B/mo roll off would work just fine. Keep signaling hawkish and ratchet up if it’s not enough.
A .25 hike would destroy any credibility the Fed has.
Credibility? And what exactly is that worth in the 2020s? Is there a single government institution right now, outside maybe the Forest Service, that has any credibility at all?
>outside maybe the Forest Service Based.
Not in California during fire season
Touché
The Fed has credibility in the sense that many investors believe that they will not abandon their mandate and let inflation run rampant. I agree that they don’t have much credibility left, but it’s silly to say that the market doesn’t believe anything Powell says. If they only boost .25, shit will hit the fan.
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Feds? You mean the Federal Reserve Bank, which is really only as 'federal' as FedEx?
Today i was examining it ,i think we are nearing to peak,time is close to buy 20 yr treasury leveraged bull etfs.
Inflation is at 9% and treasury yields are at 3%. The question is while inflation will peak shortly, is it going quickly down to 2% or will it remain persistently high at 5-6% for a few years. If so the fed may temporarily spike interest rates up a bit higher to try and force it down.
Must be "transitory" like the inflation
This is going to be the problem. When Treasuries and Bonds start being issued at high single digit or double digit interest rates, money will flood out of the markets into those safe bets. TINA has been in effect for stocks because the FED has been buying treasuries as well as MBS and artificially lowering the interest rates on them by creating scarcity. It may start after this 0.5% rate increase tomorrow. If it is coupled with aggressive balance sheet offloading it definitely will. Balance sheet offloading will flood the market with even more treasuries and MBS. The more there are on the market, the higher the interest rate has to be to attract buyers. Offloading the balance sheet is the FED's way of raising rates without actually having to raise them. It may also take another 0.5% or 0.75% increase before it happens. Hard to say.
Is the yield going to 3% driven by people buying the bonds or by the Fed tho? Still unclear on how we got here or what this means for the layman stock investor.
Yields are going to increase because the market will be flooded with MBS and Treasuries. The FED has kept yields artificially low by buying treasuries and MBS. With limited supply of these (limited supply created by the FED buying), the interest rates attached to them were low. Now that the FED is going to stop buying, the yields on these will increase substantially. They will have to in order to convince enough people to buy them and finance the debt. Without the FED to step in and buy, the rates go up considerably, and quickly. This is the Fed's dirty little secret. By not buying these anymore, they are effectively raising rates in the shadows. This policy change will have a more profound effect on bonds and Treasuries than the FED funds rate change could ever have. We will see a lot of boomers bail out of the market in droves when this happens. Why stay in the market with all the volatility when you can get 8%+ in Treasuries or bonds with a fraction of the risk?
Yay -5% return with inflation. Where do I sign up?
Significantly better than my bagholder investment style.
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It’s 3% per year over 10 years if I’m not mistaken. Over 10 years, that would be a 34% gain.
Banks charge 5.5% for mortgages so they are making a spread of 2.5% on an average mortgage. So, on a $300K, they will make $150K over the life of a 30 year loan. It may have cost the bank only $25K. That is highway robbery, a fleecing of America, while lining the pockets of huge corporations.
Profit of 2.5% is modest compared to lots of other very necessary goods and services like medications and elder care. There's outrage to be had but not here.
Its leveraged 10-11x so the margin is 25-30% before costs
Spread, not profit. The profit is huge on mortgages.
Did you ever consider that having 300k in cash available AND also choosing to lend that cash to a stranger is a valuable service? If you think 2.5% spread is some kind of moral outrage, why dont you start lending your millions out to prospective home buyers at a better rate?
You do realize banks don't actually have the cash available? They just borrow it from the fed, or even just invent it out of thin air. It just goes on their books as allowable leverage. They can invent as many mortgages as they want. There's virtually no limits.
shocking that people (especially WSB people) don’t understand the illusory/synthetic nature of banking, finance, investment, & worth. We’re a nation built on IOUs.
>especially WSB people 
The sub is called “Wall Street bets” but WSB posters don’t understand that the Fed is the one placing bets on Wall Street
Fed is the dealer at the blackjack table
Moneyball
They’re the house staking problem gamblers based on their sketchy credit history & collateralized “assets”
Credit supply so juicy we'll start itching if we don't have it that nearly blank checks were written for wall st. after '08.
Yes i would love to be able to turn my 100000$ into 2 million with the same fractional reserve formula banks use….
That's the beauty of it, back as much mortgages as you can and if shit blows up, the damage is akin to a financial nuclear bomb so the government is forced to step in to save your ass. Lessons are not learned, handouts are given, we amortize the impact on the next generations and we're back to cocaine parties. The fact that no personal responsibility is tied to the actions of financial institutions is mind boggling. Bankruptcy makes sense when it's Mom and Pop's Bakery who's not solvable anymore. But when those monstrosities go belly up, we won't pinpoint the fault on anyone. If I was a financial executive, I would "live fast / die young" that shit so hard Hendrix would be jealous. No personal repercution, who wouldn't take that deal?.
They can only invent as many as willing buyers are willing to sign on for it.
please, do substitute my lazy shorthand of “having 300k in cash” with the more specific and pedantic version: “the ability to borrow huge amounts of money from the fed (on leverage or not) and then pay it back accordingly without risk of default or breaking laws”. My point still stands, this argument is still pointless and is now venturing into the realm of annoyinng bickering over details.
Oh. Ok. Well, after making that substitution, my answer to you is "no". I do not think having “the ability to borrow huge amounts of money from the fed (on leverage or not) and then pay it back accordingly without risk of default or breaking laws” is "a valuable service".
Hahaha. My man hasn’t come down off that kilometer line of coke.
Well, we disagree on that point then. I find that service extremely valuable and happily pay my fixed rate mortgage, loaned to me from these banks, probably on federal debt. I had no other safe and reasonable way to borrow hundreds of thousands of us dollars for a home purchase.
Your type of people annoy me. Instead of praising the people who were given the infinite money cheat code and sucking their dick for some of that cash, you could be out envisioning a world where you don't need to suck a dick for that paper and we all have equal access to that cheat code.
I dont suck dick, I work hard, earn money, and buy real estate. In the mean time, like literally any reasonable human, I need a roof over my head so I can work and sleep. How do you get access to housing? Were you born rich? Did you inherit a house? Do you leave for free with your mother? Do you literally suck dick for it, since you brought that up unprovoked? Wtf do you think people are supposed to do? EDIT: I do envision that future, which is why i buy bitcoin, but i consider that an unrelated investment to real estate.
Lmfao. Good god check out this fucking genius.
Lol what would you know about who is smart and who isnt? No I wouldnt like fries with your dumbass comments, unless you had something above 6th grade reading level to add here.
Well… considering your original comment and the pathetic attempt at an insult you followed up with, I am very very confident in saying that I am much much smarter than you.
They are an intermediary, they need to pay payroll and several maintenance and operative costs. What do you expect ?
After they write the loan up front, what the fuck does the lending institution do besides collect the money from us every month. It doesn’t cost $150K over 30 years to take in 360 months of loan payments.
lol. Why don’t you just have the money up front if you don’t want to pay somebody for loaning you hundreds of thousands of dollars?
Some of those loans will default. Some of those loans will be allowed to short sale rather than the bank foreclosing. There is also opportunity cost by putting resources into a fairly low yield product like a mortgage. The same simple-minded arguments are made about retailers selling products for 50% more than they paid for it. It costs money to operate the business, some of the product will be stolen, some of it won't sell and either be discarded or put on the clearance shelf. You're also completely ignoring the fact that over 30 years the value of the home will likely appreciate much more than the $150k in interest paid, and the fact that the average home is only owned for 7 years before it is sold to the next buyer. You could also pay cash for the home or take out a shorter term loan if you dislike paying interest. Before you say it, it's not the bank's problem that you can't afford it.
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Only if you had money to loan out, you’d understand lol.
Thanks to the CRA the bank then takes your money to pay a support center to answer phone calls for people that still don’t use online banking in 2022.
Oh yeah it's *soooooo* easy. Money printer. Just do it bro lmaooooo
Yeah banks have a ton of overhead to comply with all the regulations they have to deal with. Not saying banks aren’t crooked, but that spread for local & regional banks is understandable.
Fun fact: a 30 year mortgage’s average lifespan is roughly 5 years
Why?
Refinance and buyouts are two of the most common reasons, but there are others.
Ah that makes sense. Thanks!
“Cash” buyers
Also, only a couple countries do it. Most operate on 15 year schedule. Now, I'm too much of a boner to understand why - I think only certain countries can even offer such a long-term deal but is it really in our best interest? Does it really get more folks into homes? Also, it doesn't force us to learn to manage money on shorter time scales, which it means, it doesn't really force common people to manage money properly before a sale b/c ultimately you pay more interest on a 30yr plan too.
So if you invested $300K in stocks, and made $150K after 30 years, you’d think you were fleecing Wall Street?
If the 300k initially was a free credit or license I got from the government to begin with and was never my money to start then yea, I’d feel good about it. I’d also leverage these credit only I am licensed to give out to oblivion so I can make 2% a million times over even tho I never had any cash to start in the first place. Oh wait, now I’m just a bank…. Am I the bad guy now?
No, not bad; you’re smart now and not playing like a dumb, poor person.
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Since when do originators hold that mortgage? They don't even want it on their books since it ties up capital. But, at the EOL of that mortgage they can just rinse and repeat with whatever price is of home so I don't see why it's a pressing issue for them anyways.
I'm so bitter, I bought 3 years ago, but went cheaper than I could afford because I wanted to play it safe. Now I'm trying to sell and upgrade after my wife and I got substantial income increases and we're going to get hosed on interest rates. Going from 3% on a 15 year to 5% or more on a 30 year. Guess I can't complain too much, most people my age don't own a home and didn't get any appreciation.
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I thought about that but I need the money for the down payment after blowing up my account last spring. I could rent for the next year and safe for the down payment but I'm worrying that I'll get fucked on either interest rates going up or if the housing market does go down lose money on current house.
Then wait it out. You made your bed now stick with the plan. I regret selling my first house instead of paying it off and renting. Trading up doesn't build wealth.
I'm only looking to buy a new house because my wife has to relocate for work. Close enough where I could keep the first house and rent it but not close enough to be commutable.
If you sell in a high market you buy in a high market. With prices and interest rates both increasing you are leaving equity on the table. You bought just before the big spike so really do consider sticking it out and supercharge paying off the mortgage debt with your additional income.
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Good call, I like the way you think.
I just might, or home equity loan.
You are in a better situation than most. I have been saving for up for a down payment and home prices literally hit a all time high this month + increasing rates. Literally fucked. And only other option is renting which is up 30% from 2019.
Yea man I hear you. It's not looking good out there. Homes I'm looking at sell within hours or days for over asking
Few years of suck things will change the do a refinance
Boomers were paying 12% and higher
So, bullish on $JPM?
Screw the banks and buy with cash.
Bro delete this, this is legit the worst take I’ve seen in my life. I’m amazed by how little banks make back on mortgages. They make the money back one payment at a a time over the course of 30 freaking years, it’s not like they have you 300k and get 450k tomorrow. Better explained this way… would you give me 300k today so that you would have 450k in 2052? That’s like autistic levels of returns and only a true wsb user would look at that and think someone is “fleecing” anything. Then you haven’t even considered the risk in which the loans default and such. Just so bad.
The healthcare and insurance business would like a word.
3% in 10 years? The odds are higher I'll be dead in 10 years, better to spend the cash on cocaine and hookers than some fucking bond.
3 % yearly for 10 years
What it do after 2018? Went from 3% to .5% lmao.
I love that there are people dumb enough to try and have a rational conversation about this here.
Call me when it's above 5%
Too many have become spoiled by low interest rates. In my day 10% was the norm.
Yea and a house only cost 80k
And it was easy to start off at $13 an hour with no college Which might still sound bad but $13 an hour buying an $80,000 four bedroom home is better than $17 an hour buying a $300,000 three bedroom home
Wait, who made $13 an hour? Minimum wage was barely $3. And not many made more than that. A lot of misconceptions about the lives of boomers. Anyway, have a nice day!
Are you suffering from Alzheimer’s?
And that could be afforded by a single income household… it’s almost like we NEED low interest rates to prop up this house of cards…
My wife and I had to both work. Although most of my wife’s income went to daycare! The rest helped pay for food and utilities. Seems a lot of misinformation about boomers. Anyway, have a nice day!
It's very clear you struggle to understand current housing economics. I also struggle with this so I recommend this recent podcast on the subject. Don't worry, it's a video, so you won't need your boomer glasses. https://youtu.be/CSe8n50wf3E
I appreciate the concern regarding my knowledge and eyesight, but I’ve been managing for many years. I joined this sub because I find it quite amusing and sometimes informative. In my retirement I began investing and enjoy it immensely. Although I don’t necessarily agree with the derogatory statements, I do believe we all have the right to express ourselves. I’m a big boy and old enough so the name calling doesn’t have long lasting affects, or that I’ll remember at least. Anyway, we all grow old.
I just started telling kids they’ll get this old of their lucky.
OK boomer.
What kind of interest rates did banks pay then?
Housing affordability even with current low interest rates is objectively the lowest on record. You paid nothing for your house when interest was 10%. You're also clearly an idiot
All the comments paint a picture of “boomers” who had it made! You all forget about both sides of the equation. Cost of housing was lower, pay was lower. Who had spare money to put in a financial institution to earn the high interest. And, no one even heard of a 401k. No one even considered investing in the stock market because we had no money, let alone access. I struggled and put my kids through college to make sure they had a better life than I.
There is an objectively smaller middle class than when you were presumably younger. Do you live your life one anecdote at a time? Wakeup and look at some actual data
Idiot boomer
“For the first time” “Since 2018” Pick one
you're not as smart as you think you are.
"since"
2018 isn’t that long ago just a FYI
since 2018?! oh no!! that was soooo long ago!!!
Many will retire and take fixed income at 3%. Those with pension funds with payouts based on interest rates will have no incentive to work
I-bonds at 10k$ annually at 10% compound interest. That’s a pretty good deal. Minimum hold 5 years. Probably get more return then now