5 ms·

For reference, historically, mortgage rates were greater than 6%. "Since 2008" isn't that meaningful, other than to imply "since QE regime began."

fatnoah 4y ago
The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.
- jnwatson 4y ago
  Back in the day many mortgages were “assumable”, like taking over someone else’s car lease. That’s the only way my parents could afford to buy a home in 1981. Interest rates were above 15%.
- listenallyall 4y ago
  On the other side of the coin, you used to be able to earn 6, 7, 8%, maybe even more, just by parking money in a savings account. I'd love to find a bank today offering even just 3%.
  - quickthrowman 4y ago
    Wait a few months and you’ll see 3% again, savings acct interest rates are usually a few bps below the federal funds rate.
  - fatnoah 4y ago
    True, I was getting 5% interest on my checking account.
- SilasX 4y ago
  Another interesting landmark: there’s a Law & Order episode from 1996 where they suspect that a judge’s 5% fixed mortgage is a bribe because, as the detective notes, “I had to get on my knees just for a seven percent adjustable.” https://subslikescript.com/series/Law__Order-98844/season-6/episode-4-Jeopardy https://subslikescript.com/series/Law__Order-98844/season-6/...
mancerayder 4y ago
Historically affordability (defined by home prices, interest rates and income levels) has never been so bad. Let's hope prices level things out. People always mention how high interest rates used to be.
incomingpain 4y ago
The percentage doesn't matter a great deal. It has everything to do with serviceability of the debt. If homes were $150,000 for 3bed 2 bath. 20% interest rate on mortgage would be $3000/monthly or $36,000/year amortized for 10 years. Kind of crazy but doable. The key point is the $150k and not $1mil. So as interest rates go up, the affordability of the homes goes down and so they cant sell for the same $. The average rent price will also be really similar to whatever this service rate is. So if the best mortgage rates are coming in around $3000/month. Rent will be that much more or less. The key ROI or rent vs buy is that you are paying into equity when buying. So you'll find rent vs buy is usually measured in months. That is to say, if you're staying in the general area of the city or whatever. You might as well buy so long as you'll stay for about a year. Though this is a risk. If housing crashes in price because of brain drain exodus out of a region, or immigration were to be shut down, or politicians in general being bad causing the crash. Then you might end up owing more than its worth. However, it's an important detail, much of a country's wealth is in its developed land. So when housing crashes, it's literally dropping the wealth of the country. That's a sure way to get your head chopped off as a politician.

fatnoah 4y ago

The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.

jnwatson 4y ago
Back in the day many mortgages were “assumable”, like taking over someone else’s car lease. That’s the only way my parents could afford to buy a home in 1981. Interest rates were above 15%.
listenallyall 4y ago
On the other side of the coin, you used to be able to earn 6, 7, 8%, maybe even more, just by parking money in a savings account. I'd love to find a bank today offering even just 3%.
- quickthrowman 4y ago
  Wait a few months and you’ll see 3% again, savings acct interest rates are usually a few bps below the federal funds rate.
- fatnoah 4y ago
  True, I was getting 5% interest on my checking account.
SilasX 4y ago
Another interesting landmark: there’s a Law & Order episode from 1996 where they suspect that a judge’s 5% fixed mortgage is a bribe because, as the detective notes, “I had to get on my knees just for a seven percent adjustable.” https://subslikescript.com/series/Law__Order-98844/season-6/episode-4-Jeopardy https://subslikescript.com/series/Law__Order-98844/season-6/...

mancerayder 4y ago

Historically affordability (defined by home prices, interest rates and income levels) has never been so bad. Let's hope prices level things out. People always mention how high interest rates used to be.

incomingpain 4y ago

The percentage doesn't matter a great deal. It has everything to do with serviceability of the debt. If homes were $150,000 for 3bed 2 bath. 20% interest rate on mortgage would be $3000/monthly or $36,000/year amortized for 10 years. Kind of crazy but doable. The key point is the $150k and not $1mil. So as interest rates go up, the affordability of the homes goes down and so they cant sell for the same $. The average rent price will also be really similar to whatever this service rate is. So if the best mortgage rates are coming in around $3000/month. Rent will be that much more or less. The key ROI or rent vs buy is that you are paying into equity when buying. So you'll find rent vs buy is usually measured in months. That is to say, if you're staying in the general area of the city or whatever. You might as well buy so long as you'll stay for about a year. Though this is a risk. If housing crashes in price because of brain drain exodus out of a region, or immigration were to be shut down, or politicians in general being bad causing the crash. Then you might end up owing more than its worth. However, it's an important detail, much of a country's wealth is in its developed land. So when housing crashes, it's literally dropping the wealth of the country. That's a sure way to get your head chopped off as a politician.