Posted on 09/06/2023 6:04:40 AM PDT by Red Badger
KEY POINTS:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.21% from 7.31%
Applications for a mortgage to purchase a home fell 2% for the week and were 28% lower than the same week one year ago.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
After rising sharply for several weeks, mortgage interest rates pulled back slightly last week, but not enough to revive mortgage demand.
Total mortgage application volume fell 2.9% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.21% from 7.31%, with points falling to 0.69 from 0.73 (including the origination fee) for loans with a 20% down payment.
“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates,” said Joel Kan, an MBA economist. “Rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market.”
Applications to refinance a home loan — which are most sensitive to weekly interest rate changes — fell 5%, compared with the previous week, and were 30% lower than the same week one year ago. The vast majority of borrowers today have loans with rates below 4%. Even with high rates of home equity, borrowers are more likely to take out a second loan to pull cash out, rather than lose their low rate through a cash-out refinance.
Applications for a mortgage to purchase a home fell 2% for the week and were 28% lower than the same week one year ago.
“Prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” Kan added.
Mortgage rates turned higher again to start this week, and more economic data out in the coming days could impact rates further. While they have moved in a narrow range the past few weeks, 7% appears to be the new normal. This has thrown cold water on home prices, which had been rising for much of the year but which appear to be easing now yet again.
I’m still waiting for the Chocolate Rations to be increased! ;)
So HAPPY to be OUT of the mortgage trap. :)
Basically, the artificially low interest rates post covid pulled demand forward leading to increased prices. Hence the lower current demand. Most of the time everything reverts to long term trend.
Us too!
Paid off my 30 Year mortgage in 16 years thanks to:
TRUMP!...................................
That’s the tagline from the newest hit reality series, Tiny Houses 2.0.
If people realized how much interest they pay on a 30 year, they would get a 15 year, even though that would typically be a few hundred dollars more a month. If one is paying some $2,000/mo anyhow, they can find a way to pay maybe $2,400 and save themselves 15 years of payments!
Also, much of the interest is paid up front. In a 30 year mortgage, you are paying almost all interest (and very little principal) over the first ten years.
That's why it drives me crazy to see people re-fi their mortgage to get a lower rate. They are re-setting the clock and going back to paying almost all interest! Maybe if they were re-fi'ing to a 15-year mortgage from a 30, that would make more sense.
But, where will we get those boxes to live in when Brandon & Crew ban refrigerators?!?! ;)
Very glad our kid bought into a house almost two years ago at 3% fixed. They’re not pleased to see their first house decrease in value, but we’ve told them that pretty much everyone’s house in the county has decreased in value. But buying their house now, at it’s current market value and current 30-year fixed mortgage rates, would result in a mortgage payment roughly 35% higher.
It hasn’t always been that simple. Prior to the tax changes on SALT deductions in 2017, every analysis I ran basically showed it was breakeven between paying interest on my mortgage and the tax benefits. So I had been keeping my mortgage.
With the changes in SALT, the equation immediately changed and I paid off the house.
Depends on the interest rate. At 3%, which was quite common two years ago, after 10 years roughly 24% of the principal would be paid off. At 7%, roughly 14% of the principal would be paid off.
McMansion 1.0
Let’s all party like it’s 1899!..................
This Ol’ Box
https://www.youtube.com/watch?v=1BNgRpRuWGs
“Tiny Houses 2.0.”
The water main and sewer piping isn’t going to be cheaper.
A house half the size isn’t going to be 50% cheaper, maybe about 20% cheaper.
“That’s why it drives me crazy to see people re-fi their mortgage to get a lower rate. “
Re-fi’d at 3%. Money invested in the market drawing about 3% in qualified dividends plus appreciation. No brainer!
Take the couple of hundred dollars a month difference between the 15-year mortgage payment and the 30-year mortgage payment and invest it across a diverse set of liquid assets.
After 15 years you will likely end up with an investment account that exceeds the remaining balance on your 30-year mortgage. That gives you the flexibility to either pay the mortgage off in 15 years, or do something else with the money.
Me too, except the wife and I have a very large house on the beach we are thinking about downsizing from. We’re getting a bit long in the tooth and our kids, grandkids and great grandkids are getting older too and their interests are changing resulting in not nearly as many busy weekends and vacations to look forward to.
We also would like a smaller home on a river or lake, perhaps a small ranch we can raise some poultry and livestock, I’m never ever going to be an insect gourmand. Chickens are interesting critters, we miss raising.
However, we’re concerned about selling. There are a few cash buyers in the market, but not many who are going to finance a seven figure mortgage at 7%. Right now, we’ve decided to ride it out here, until we get past this FJBidenomics.
To have a cheap 30-year mortgage has value because the 2035-2050 portion at say 3% probably will be below the interest rates at the time.
The mortgage holder would often be wise to give a buyer a 4% mortgage for 15 years instead of remaining stuck with a 3% loan.
That was the purpose of SALT. I think that was the best change that came out of the previous administration. It sucked big time for blue states like mine having the nations taxpayers pay for our state’s economic virtue signaling by deducting state and local taxes on our Federal returns.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.