Mortgage demand rises for the first time in six weeks, despite sharply higher interest rates

[alarmguy]

@alarmguy the answer is education. We have to arm people with financial tools, financial knowledge.
IMO, no one should get outta grade school without a working knowledge of banking, credit, retirement funds.
No one should get outta high school without an understanding of markets, time value of money, etc.

Will everyone heed good advice? Of course not, but at least give them a fighting chance.

Oh my gosh, I tell this to my wife and others all the time, it drives me crazy!!!!’
Personal finance should be a requirement, multiple years of it in high school.
You know call me a conspiracy theorist but I bet you the financial institutions in this country will make sure something like that never sees the light of day.

Jeff I agree with you 1000%.

 

[Vil_Riker]

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.

The risk on mortgage loans is not on the bank. These are collateralized and sold on the market as a hedge. The bank simply services the loan.

It's a complicated system where the only one that can et screwed is the borrower.

 

[JeffKeryk]

Understood about the world wide economy. Not much we as US citizens can do about that but we sure have a choice as to who is making policy decisions here. Like our energy policy and deficit spending on giveaway programs and the yet unpublished cost of allowing more than 2 million indigent, unskilled and uneducated people to walk into the country and become immediate liabilities.

Also, understood about the economy not being able to turn on a dime. However it sure did pretty quickly in 2016. A lot of it has to do with consumer and investor confidence. And currently there isn't any reason to think that the people in charge have the skills or even worse, the economic philosophy necessary to make the right choices.

If our citizens think there is no one to blame, and think the current administration is capable of making the right decisions to pull us out of it, they will vote for the status quo. If they think another group of leaders and appointees to critical positions will do a better job, they will vote for that team.

Respectfully, this is simply wrong.

 

[zzyzzx]

 

[zzyzzx]

 

[zzyzzx]

 

[SC Maintenance]

The direction of the housing market currently is a conundrum to me.

Interest rates have risen the fastest in history - they have never come close to doubling in 9 months before, but there still historically below average. Last time they were this high was 2008, if you believe in karma.

As of July we had 11 months of listed supply on the market, which is getting close to historic highs - 6 months is considered balanced. New housing starts fell pretty fast as well. However for the last decade housing starts have been far below historical norms, and far below replacement numbers.

We have the largest generation in history retiring now. We have the smallest generation in history entering the workforce now - Gen z.

There are enough other contrary statistics out there to justify any thesis you like, on either side of the argument.

 

[alarmguy]

The direction of the housing market currently is a conundrum to me.

Interest rates have risen the fastest in history - they have never come close to doubling in 9 months before, but there still historically below average. Last time they were this high was 2008, if you believe in karma.

As of July we had 11 months of listed supply on the market, which is getting close to historic highs - 6 months is considered balanced. New housing starts fell pretty fast as well. However for the last decade housing starts have been far below historical norms, and far below replacement numbers.

We have the largest generation in history retiring now. We have the smallest generation in history entering the workforce now - Gen z.

There are enough other contrary statistics out there to justify any thesis you like, on either side of the argument.

We personally are navigating turbulent waters, putting our home on the market soon and in contract for a new home elsewhere.
Good news is market is strong here and also where we are moving, though, even with it strong our home will not sell for (mentally knocked 10%+ off) what I expect, what it would just a couple months ago and it will now take more then two days to sell it. Its also not going to get bid higher than the asking price. *LOL*

I expected this, though wish it held off about 6 months *L*
Lowest interest rates in history where government took every action possible to interfere and create those low rates, and voters vote for MASSIVE government loans and debt now over 30 trillion, sooner or later something had to give = fastest rise in history.
This is what the public votes for (no politics)
Now we are going to get back to a more normal market and there will be a lot of PAIN in doing so, can't borrow and spend money forever without consequences and we are only at the beginning that will last a decade or more. My wife and I are in good shape though, the younger generation is going to get a lesson in economics.

(ps. expecting this to happen sooner or later, although stated I was hoping for later, we don't have to move, if we don't move we can walk away from our purchase with just a "sting" and I made sure it would just be a sting when we signed the contract with the builder though we fully intend on moving forward, I do have a safety net should something way worse happen with this market correction and can stay where we are)

 

[Dave Hess]

PAIN is very good.

The chickens are now coming home to roost.

Lots of folks that were financially overextended will now realize their big ego was wrong.

 

[JeffKeryk]

PAIN is very good.

The chickens are now coming home to roost.

Lots of folks that were financially overextended will now realize their big ego was wrong.

Financially overextended scares the you-know-what outta me. Actually, I understand being broke but being overextended is simply beyond my comprehensive. Why would anyone do that to themselves? A self inflected wound? Makes zero sense.

 

[2strokeNorthstar]

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.

It’s tax deductible, the whole economy is based on a rip off

 

[2strokeNorthstar]

No not correct. I own half a dozen properties, none of which have a mortgage. THAT's how you build wealth.

That’s how you keep others from building wealth some would say

 

[Hillbilly Deluxe]

Respectfully, this is simply wrong.

You are correct. It was 2017.

 

[alarmguy]

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.

You are correct, of which I think you know that I agree based on my posts in here. The fact of the matter is people choose to take a 30 year mortgages instead of paying them down in 10 or 15 years or flat out taking a 10 or 15 year mortgage from the start.
We as a people are addicted to debt, too immature and we will pay you at any cost to kick the can down the road without considering the financial cost.
Coming up soon 45 year mortgages! Just wait and see.

 

[JeffKeryk]

You are correct. It was 2017.

Nope. The biggest changes in the past 20 years were the downturn that started after 2004 and ran thru 2009, the upturn that started aroung 2010 and continued along until about 2019 2020 when the pandemic hit. After 2020 GDP surged returning most of the losses.

 

[JeffKeryk]

You are correct, of which I think you know that I agree based on my posts in here. The fact of the matter is people choose to take a 30 year mortgages instead of paying them down in 10 or 15 years or flat out taking a 10 or 15 year mortgage from the start.
We as a people are addicted to debt, too immature and we will pay you at any cost to kick the can down the road without considering the financial cost.
Coming up soon 45 year mortgages! Just wait and see.

Mortgages are a way to gain an appreciating asset with other people's money.
Martgages are also a way to financial misery.

Abusing debt is not the same leveraging debt.

 

[DejaVue]

The reported doom and gloom in single family homes is not matching the data.

People moving from certain areas will still do their best and make other financial sacrifices to buy a home in a nicer area. There's plenty of affordable housing in America, but people pay the, we'll call it "the crime tax," so they don't have to live there. Crime is up a lot lately.

Also, there's ever more housing demand due in part to the millions and millions of new migrants every year having to live somewhere.

 

[DejaVue]

Mortgage demand rises for the first time in six weeks, despite sharply higher interest rates​

Things such as the following help keep demand up. A similar easy-mortgage program's end results were seen during The Great Recession.

Bank of America Tests No-Down-Payment Mortgages for Minority Communities

Bank of America Corp. started a trial program aimed at helping first-time homebuyers in Black and Hispanic neighborhoods by offering mortgages that don’t require down payments, closing costs or minimum credit scores, all considered longtime obstacles to narrowing the gap between White and...

www.bloomberg.com

Bank of America Corp. started a trial program aimed at helping first-time homebuyers in Black and Hispanic neighborhoods by offering mortgages that don’t require down payments, closing costs or minimum credit scores, all considered longtime obstacles to narrowing the gap between White and minority ownership.

Under the BofA program, the lender is giving homebuyers down-payment grants of $10,000 to $15,000 so they have immediate equity in their homes.

Separately, Bank of America announced a lending program to help small businesses owned by minorities and women. Historically disadvantaged borrowers will be able to apply for down-payment grants of as much as $25,000 to help with commercial real estate purchases, according to a statement.

 

[dlundblad]

Nope. The biggest changes in the past 20 years were the downturn that started after 2004 and ran thru 2009, the upturn that started aroung 2010 and continued along until about 2019 2020 when the pandemic hit. After 2020 GDP surged returning most of the losses.

I do remember a certain someone saying another certain someone was “riding his coattails.” Lol.

I think you’re wrong. About 10 years ago, we’re told America’s best days are behind us and that some jobs won’t be coming back to the US. 3% GDP growth was considered great.

Perhaps the growth you speak of was just a mindset change after Fall 2016.

 

[JHZR2]

@alarmguy the answer is education. We have to arm people with financial tools, financial knowledge.
IMO, no one should get outta grade school without a working knowledge of banking, credit, retirement funds.
No one should get outta high school without an understanding of markets, time value of money, etc.

We have a fourth grader, and at back to school night the teacher went over how the kids get to learn about earning, interest, paying taxes, etc., and at the end of the year they get to do an auction to buy some widgets with their “money” that they accumulated in the learning process across the year.

Of course one of the woke parents made a huge gripe about how they have so many things to say about capitalism and how they don’t approve of this at all. Even around here in PRNJ most of the other parents wondered how anyone could have such an outlook versus life skills. But this is pervasive. I’d suspect you have even more crazies out your way…

It just struck me as incredible. They’re trying to teach exactly as you mentioned in grade school, and now it’s viewed by some as bad… apparently it’s privilege to learn about financial literacy and paying taxes.

You’re spot on. Kids need to learn this… and the actual value of money. What it takes to earn it.