Jump to content

Typical mortgage payments soar $337 in just SIX WEEKS as interest rates near 7%


pipedreams
 Share

Recommended Posts

Just this week, lender Freddie Mac said that the lending rate has more than doubled in the last 12 months  

The average US homeowner saw their monthly mortgage payment rise by 15 percent or $337, according to a shocking new report from Redfin. 

The report goes on to say that the rising mortgage rates of around seven percent are the highest since July 2007 shortly before crash that triggered the great recession. 

This is causing potential homebuyers to get cold feet and decide not to buy in the current market. 

https://www.dailymail.co.uk/news/article-11271411/Typical-mortgage-payment-soared-337-just-six-weeks-rates-hit-7.html

image.png.d9cf17e8415c09a366b5c282681081a2.png

  • Like 1
  • Sad 1
Link to comment
Share on other sites

No argument it is bad, and will get worse, but still under the rates in 1971 and 1991 and 2000, or there abouts. 

We got very spoiled over the past few 20?, years, but everyone with any concept knew  it would moderate eventually. I'm figuring the current establishment will rival the Carter era with all the damage they have done over less than two years, but we'll see.

Mortgage Rate Trends

  • Like 2
Link to comment
Share on other sites

Well, on the bright side, it should cut back on the rise in home prices.  I paid 14 1/4 when I bought my place in 1984, of course refinanced a couple times as the rates fell but made the same payment amount and paid it off 10 years early. 

  • Like 3
Link to comment
Share on other sites

30 minutes ago, FullClip said:

Well, on the bright side, it should cut back on the rise in home prices.  I paid 14 1/4 when I bought my place in 1984, of course refinanced a couple times as the rates fell but made the same payment amount and paid it off 10 years early. 

Yea, we looked at refinancing when rates hit bottom. Where we were at the point of the amortization, the refinancing fees, the amount we financed to begin with, and all the other things that go in to it, we would have saved about $25 per month, but put 5 years back on the loan. Just wasn't worth it. 

Any more the mortgage isn't the problem, it is the monthly escrow for taxes and insurance. That effectively doubles the payment. Insurance is the major culprit. They have gone full retard on rates of late.

 

Side Note: How big does a mortgage have to be to increase it over $300 per month with only 3% interest increase.? Can someone put numbers up? I'll play around and figure it out, just being lazy.

OK, here are the numbers. $300K financed, from 3.5% to 5.8% is $323 and maybe some change. I'm a bit surprised it was sonly $300K, but that will buy you a WHOLE lot of house here, for now. 

The move in just six week is pretty concerning.

  • Like 2
Link to comment
Share on other sites

I live in a rural area where larger land owners have been selling off frontage along county roads with county water. One to five acres for McMansions. A payment P&I at 3% will buy about $300,000 but at 6% only about $200,000. 

  • Like 1
Link to comment
Share on other sites

In 1986 we financed our home for 11 1/4 %.  that with a 40% down payment.  And a very good credit rating.  

But home prices of course were less.

But then we made less $ at the time.  

the day we went in to sign the mortgage papers the rate was 11 %.  By some coincidence the rate rose a quarter percent from that morning until we signed the papers at noon.

We had a 20 year loan.  Paid it off in 10.

  • Like 2
Link to comment
Share on other sites

The house we own today cost us $14,050 in 1963.  4 3/4 %.  Concrete driveway, garage, lawn in, everything finished inside and out.  Later I added for a triple garage.  I did it myself and had to learn how to pour stepped footings. 

The inspector said I should have someone do it when I asked what "stepped footings were?".  When he came to see my work he told me it looked like a case of gross overkill.  I even poured a column into the long foundation wall.  The hardest part was hauling 36 yard of sand fill.

Today the tax is based on an evaluation of $384,000.  Makes no difference.  If I sold it I would just have to buy another one and pay the new price.

  • Like 2
Link to comment
Share on other sites

12 hours ago, pipedreams said:

Just this week, lender Freddie Mac said that the lending rate has more than doubled in the last 12 months  

The average US homeowner saw their monthly mortgage payment rise by 15 percent or $337, according to a shocking new report from Redfin. 

The report goes on to say that the rising mortgage rates of around seven percent are the highest since July 2007 shortly before crash that triggered the great recession. 

This is causing potential homebuyers to get cold feet and decide not to buy in the current market. 

https://www.dailymail.co.uk/news/article-11271411/Typical-mortgage-payment-soared-337-just-six-weeks-rates-hit-7.html

image.png.d9cf17e8415c09a366b5c282681081a2.png

Actually the only US homeowners who saw their payments rise because of increasing mortgage interest rates were those with adjustable rate mortgages. Those with fixed rate mortgages saw no change in their monthly payment due to increased mortgage interest rates.

People trying to buy homes, however, may have been priced out due to the increasing mortgage interest rates. 

  • Like 1
Link to comment
Share on other sites

6 hours ago, railfancwb said:

Actually the only US homeowners who saw their payments rise because of increasing mortgage interest rates were those with adjustable rate mortgages. Those with fixed rate mortgages saw no change in their monthly payment due to increased mortgage interest rates.

People trying to buy homes, however, may have been priced out due to the increasing mortgage interest rates. 

Correct, and many were already struggling to make their payment or were already behind due to the covid mess.  Most of the older or retired will be OK but the younger with a family already struggling will get hit the hardest.

  • Thanks 1
Link to comment
Share on other sites

4 hours ago, pipedreams said:

Correct, and many were already struggling to make their payment or were already behind due to the covid mess.  Most of the older or retired will be OK but the younger with a family already struggling will get hit the hardest.

Yea, my sister got hit because of a variable rate mortgage a bunch of years ago. We and others, told the to get their house financed with a fixed rate, but they insisted they would go down. They came close to losing the house, but managed to hang on. Variable rate mortgages are easier to get into, usually and that is why many do it, but seem to be very predatory.

They listened after they finally got that one overcome. When they moved, they were offered some insane low rate to buy, but were smart and got in to a conventional set up. They would have been totally screwed if they would have gone for the variable again, and long before now. Live and Learn.

  • Like 2
Link to comment
Share on other sites

This only applies if you were nuts enough to have a variable rate.  We locked the loan on this farm at 3.35% because we knew that while that was slightly higher than the going rate for a variable rate at the time, it was also lower than what we expected it to be over the next 25 years... so now we have 15 years left to pay, and we don't have to worry about the payment rising above our ability to pay (at least for reasons of interest rate increases - the fact that my husband is expecting to get completely cancelled out of his job within the next 5 years is something else entirely, but that's a different thread entirely).

  • Like 1
Link to comment
Share on other sites

3 hours ago, LostinTexas said:

Yea, my sister got hit because of a variable rate mortgage a bunch of years ago. We and others, told the to get their house financed with a fixed rate, but they insisted they would go down. They came close to losing the house, but managed to hang on. Variable rate mortgages are easier to get into, usually and that is why many do it, but seem to be very predatory.

They listened after they finally got that one overcome. When they moved, they were offered some insane low rate to buy, but were smart and got in to a conventional set up. They would have been totally screwed if they would have gone for the variable again, and long before now. Live and Learn.

To me, it only makes sense to go the variable rate if you have the money socked away (at a higher rate than the variable, so you are earning on it) so you can pay the whole thing off early if the variable rate increases, and your investment doesn't.  We weren't in that position, so we stayed far away from variable rates and those insane balloons.  And that only works if the terms ALLOW for early payoff without penalty (or the insane bit of current Sallie Mae student loans, where there is no "early payoff penalty" but you still have to pay all the interest you would have paid for the full term of the loan, so there is actually no benefit to you to payoff early anyway).

 

  • Sad 1
Link to comment
Share on other sites

Thinking of buying a second home. I will go for a variable because I am taking money from my 401K in small bites to help with the tax issue.  House will be payed off before balloon payment.

I figure brick , mortar and land are a better investment at my age.  At least the kids can sell it and get the money back out.

  • Like 3
Link to comment
Share on other sites

Buy intelligently. People around here are not. I won't say they will never see their money out of it, but they are definitely in for the long haul.

Sellers were loving it, and now are getting butt hurt because things aren't moving, and certainly aren't moving for double and triple the appraised value.

A lot of investors are squirming right now. Big investments, a huge remodel, and rising interest don't mix a lot for resale. A lot of rentals hitting the market, and most are way out of the normal range for rental costs.

Don't think it will be 2010 again, but the stupid is still going to hurt.

  • Like 2
Link to comment
Share on other sites

Looking like this will drive even more houses into the hands of corporate landlords and put even more people in rentals.

Of course everyone rents everything from the government anyway so that the public screwls can keep churning out mindless dolts.

  • Like 1
Link to comment
Share on other sites

1 minute ago, Fog said:

Looking like this will drive even more houses into the hands of corporate landlords and put even more people in rentals.

Of course everyone rents everything from the government anyway so that the public screwls can keep churning out mindless dolts.

If you were managing a LARGE pool of investments with big recurring cash receipts today, would you prefer to buy residential properties and set up a management company to handle them or buy bonds rated AAA based on a pool of mortgages?

Link to comment
Share on other sites

There's a recurring theme in our society where folks believe that with good intentions (and taxpayer guarantees) bad credit risks can be rehabilitated with the stroke of a pen. To say it hasn't worked so far is to ignore its actual intention.

  • Like 2
Link to comment
Share on other sites

11 hours ago, LostinTexas said:

A lot of rentals hitting the market, and most are way out of the normal range for rental costs.

Truth.  I've been looking for a place to rent in retirement, in a warmer climate.  Rents are insane.  Either priced out of reach in a nice area, or income restricted in a crap area.  Either way I lose.

  • Like 1
Link to comment
Share on other sites

On 10/3/2022 at 5:25 AM, gwalchmai said:

Y'all remember CD rates in the 80s? :greensupergrin:

Yep.  Remember those bank ads that said if you invested $10,000 in your 20's  (IRA) and then let it ride without contributing any more money when you retired it would be worth 1 million dollars.  

 

  • Like 2
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

  • Please Donate To TBS

    Please donate to TBS.
    Your support is needed and it is greatly appreciated.
×
×
  • Create New...