You think 4% is slow, what about 5%?

[Elliott]

"When will mortgage rates hit 5%? It could happen soon​

Times are changing fast, though. The average rate on a 30-year loan surged to 4.59 percent in this week’s survey — and 5 percent might not be far away.

“I would expect 5 to show up within a month, especially if there are additional Russian sanctions that point to greater supply issues,” says Joel Naroff, president of Naroff Economic Advisors.

Ken H. Johnson, a housing economist at Florida Atlantic University, likewise says rates could hit the 5 percent mark soon. “Unless things slow down in the 10-year Treasury note market, any day now,” he says. “We are outside the bounds of normality now. Strange things happen at the peak of a market.” "
(Source: Bankrate)

 

[George Hatch]

I've been saying for years that such increases are possible, and that if/when they occurred it would have a significant impact on the amount of sale price that a mortgage payment would support.

 

[J Grant]

6% at one time was considered a reasonable interest rate. Nothing wrong with 5% , but it might (finally) make prices soften - at least in some markets.

People keep whining about inflation, so interest rates are one of the ways to combat it. There has to be some pain, somewhere, sometime -unemployment down, wages high, but all the whining is inflation, so now folks got what they asked for -feds are slowing inflation by raising interest rates. We are a nation of whiners, complaining about a problem, then complaining about the to the solution to problem- expecting a magic overnight answer to everything -

 

[George Hatch]

IMO we have scavenged a lot of future demand with the constant rate cuts over the last few years. There won't be many borrowers who will do a refi at 5% if they are already holding at 4% or less.

 

[glenn walker]

IMO we have scavenged a lot of future demand with the constant rate cuts over the last few years. There won't be many borrowers who will do a refi at 5% if they are already holding at 4% or less.

Most in CALI were written at 2% to 3% on 500,000 plus notes. Today most are at 4.5% and will see 5% on next rate hike.

 

[J Grant]

IMO we have scavenged a lot of future demand with the constant rate cuts over the last few years. There won't be many borrowers who will do a refi at 5% if they are already holding at 4% or less.

It is going to be a weird market for awhile - because so many either refinanced, or purchased, at very low interest rates, they would not sell or move unless necessary, because now they have to buy at a higher rate - which means inventory will be tight, which means prices, might not fall that much as long as there is some demand out there....

Some who bought at inflated prices though or over leveraged in a refinance might over time default - because I see a LOT of properties in tax arrears when I search for comps - RE taxes have skyrocketed from the high sale prices, combined with HOA fees etc, so that low interest rate still can result in high carrying costs - and some of the investment properties and small income properties sold at crazy prices there is no way rents will cover the costs - rents went up, but rents have a top limit because they are paid from actual wages, rather than financed.

 

[George Hatch]

I agree with that. In the long term, it will be interesting to see if the effective demand actually does get isolated from everything else going on in the economy. If so it will be the first time that has ever happened in our modern history.

 

[Terrel L. Shields]

How the pandemic housing market spurred buyer's remorse across America

Low interest rates, high rents and working from home combined to push many young Americans to buy their first home over the last two years. But it's not without challenges.

www.npr.org

There won't be many borrowers who will do a refi at 5% if they are already holding at 4% or less.

they would not sell or move unless necessary, because now they have to buy at a higher rate - which means inventory will be tight, which means prices, might not fall that much as long as there is some demand out there....

I doubt it will take long for someone to get in a pinch and need to refi for the cash and pay a huge premium in monthly payments...

 

[George Hatch]

All the action is at the margins. Only the most aggressive buyers land the purchase when the market is increasing, and only the most aggressive sellers are landing the sale when the markets are in decline.

 

[glenn walker]

How the pandemic housing market spurred buyer's remorse across America

Low interest rates, high rents and working from home combined to push many young Americans to buy their first home over the last two years. But it's not without challenges.

www.npr.org

I doubt it will take long for someone to get in a pinch and need to refi for the cash and pay a huge premium in monthly payments...

We are already seeing appraisals to start coming in low again and now landlords are starting to unload into these prices thinking we are near or at a top. As far as inventory its amazing how you can go to almost none to having a normal amount. We shall see but i think we played this about as far as we could out here in CALI but in low cost states they will probably be just fine but out here we live and die in booms and busts as unstable people in teh State of fruits and nuts don't tend to like stable markets.