Mortgage demand rises for the first time in six weeks, despite sharply higher interest rates
- Thread starter GON
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This is actually a well published mis-truth for a couple reasons - more slight of hand. Anyone that says the fed can't raise rates due to the public debt doesn't understand central banking.
FIrst, the national debt is denominated in treasuries anywhere from 30 days to 30 years. Last I looked average issuance was 7 years, so even if rates rise we won't see the affect on the budget for years to come.
Second, the government doesn't make monthly interest payments like the rest of us, they sell bonds which need to be paid at some future date, with an applied interest rate. For example if the government sells a bond worth $1M a year from now today for $900K, in one year they will have to repay the $1M - at which time the realized interest rate was approximately 10% (not quite, but close enough).
Lastly the government really never pays any debt - it simply rolls the maturing debt into new debt / bonds - so the interest rates is compounded on a balance sheet, but its really just a number in the ledger.
The biggest near term affect of rising interest rate is lowered borrowing by the private sector. The government likely doesn't consider it at all when deciding how much to spend.
My first house was 10.25% and that was considered good.
My older brother bought a waterfront home at 15.5% a long time ago. The good news was that if he was there (he sold a few years back), the home is now worth TEN times its value because he was one of the few who bought in that environment.
We are now getting back to a normal market.
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I wouldn't call a single data point a trend. The mortgage demand has been extremely low for a while. Also demand I think tracks applications, not closings, so its even possible the spike in short term demand will lead to nothing.
Or people could be pricing houses more moderately. We won't see the averages for a few months.
Still in all, 6% mortgage when inflation is 8% is still negative 2% in real terms, so it could be for real, hard to say. 6% on a 30 year fixed is still ridiculously cheap.
Or people could be pricing houses more moderately. We won't see the averages for a few months.
Still in all, 6% mortgage when inflation is 8% is still negative 2% in real terms, so it could be for real, hard to say. 6% on a 30 year fixed is still ridiculously cheap.
One of my online banks just went to 3.00% and a half dozen others are over 2.50%.
and we all know that inflation is way more that 8%....
Mortgages are total rip offs at any interest rate. For the first 5 or 10 years, something like 90% of the monthly payment goes towards interest and only a tiny bit towards the house.
Mortgages are a way to gain an appreciating asset using other people's money.
Nope, they are a way banks get rich. On a $400,000 mortgage you will pay over a million dollars to the bank over 30 years.
And if your house is worth say $400,00.00 it will,be worth 1.2million when it's paid off- at least in the Western U.S.
So you would be good with a 3% return on your investments?
Granted, yes, the mortgage backers get all their money on the front end, whereas investing yields most money on the far end.
The bank takes a big risk when they loan you that money. They don’t loan money from the goodness of their hearts.
What risk? 20% down and a real appraisal means little risk if they have to foreclose. If they make risky loans, they are stupid.
Ridiculous. Of course there is risk. You could lose your job. You can become sick or disabled or worse yet, pass away. The house can deteriorate with no action from the person living in it. Some treat their homes like trash bins. There are also neighborhood and regional risks. There are market risks. It’s a long list.
I know of no one-absolutely no one who has ever regretted taking out a mortgage-they have seen MASSIVE REAL ESTATE APPRECIATION. Yo can make far more money investing in Real Estate than flipping cars.
Ask me how I know..........
BTW-it sounds like you don't own real estate...is this correct?
No not correct. I own half a dozen properties, none of which have a mortgage. THAT's how you build wealth.
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Do you have an alternate solution? Doubtful most people could ever save enough to pay for a house up front while also paying rent.
Go try to take out a commercial loan, you will find mortgage interest rates are ridiculously low.
Now if you want to talk about rip off's - look at all the people involved with their hands out whenever you transact real estate - 2 realtors, 2 attorneys, all kinds of service companies - appraisals, surveys, closing fees not to mention local government with their hand out. Its like 15% off the top to transact a house.
No, not a solution. Was commenting on how few people realize how much they are truly paying on a mortgage. No different from 20 or 25 percent car loans where people only care about the down payment and monthly payment.
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