4 ms·

Wait until they see 2026. 10-14% mortgage (my prediction)

by czbond 4y ago

yieldcrv 4y ago
rates have nearly tripled in the last year no need to go that far out
- mrosett 4y ago
  https://xkcd.com/605/ https://xkcd.com/605/
  - yieldcrv 4y ago
    a new category of barely relevant XKCD the only similarity would be the 1 year aspect matching the sample size of 1 in that comic, but the driving forces are the quantitative tightening which are a greater sample size, and the velocity is important there's better jokes if mortgage rates want to stay 100% over Fed Funds rate, or 100% over 30yr treasuries, we'll have 8-9% by end of year, with many borrowers already being offered or experiencing 10%+ by then
dlp211 4y ago
You think that we are going to have continued high inflation through 2026? Based on what?
- newaccount2021 4y ago
time_to_smile 4y ago
For anyone relatively young seeing this range and thinking "ridiculous!", it's not. Growing up my parents rate was 12% and in the early 80s rates got up to over 17% [0]. It is very possible for the era of cheap money to end across the board. 0. https://www.freddiemac.com/pmms/pmms30 https://www.freddiemac.com/pmms/pmms30
- Ar-Curunir 4y ago
  House prices were also much lower in your parents time.
  - reggedtorespond 4y ago
    Right, and this is a hard point to overstate. The average home price was around $80,000 in the early 80s, whereas it's currently $525,000. If we see home prices drop by 85% we won't be buying homes with US dollars any more.
    - xboxnolifes 4y ago
      That $80,000 isn't inflation adjusted. Drop would be more like 40%, not 85%. But current home prices don't need to drop. The average price needs to drop. That means more housing. Likely ends up meaning some drop or stagnation in current prices, but you don't need to shift down 40% to reach the goal. Housing in my area is only a little above the 80s price after adjusting for inflation. Of course, the 80s price is nationwide average, while my given price is only the local average.
  - czbond 4y ago
    High interest rates on their way up drop the price of homes.
- gdubs 4y ago
  I recall my parents being very proud of securing a 7% rate in the 90s when they bought our first home. That said, it was a very very inexpensive house compared to today's prices.
izend 4y ago
I'm betting the rates will be back to 2% by 2026 as global growth collapses due to a combination of high interest rates, deleveraging of over-leveraged organizations and geopolitical strife causing further de-globalization.
dehrmann 4y ago
That at least keeps up with current inflation. We'll see what inflation looks like in 2 years.
quonn 4y ago
If so, renting will also be much more expensive
- seer-zig 4y ago
  Where does the cycle end?

Wait until they see 2026. 10-14% mortgage (my prediction)

by czbond 4y ago

Wait until they see 2026. 10-14% mortgage (my prediction)

yieldcrv 4y ago

rates have nearly tripled in the last year no need to go that far out

mrosett 4y ago
https://xkcd.com/605/ https://xkcd.com/605/
- yieldcrv 4y ago
  a new category of barely relevant XKCD the only similarity would be the 1 year aspect matching the sample size of 1 in that comic, but the driving forces are the quantitative tightening which are a greater sample size, and the velocity is important there's better jokes if mortgage rates want to stay 100% over Fed Funds rate, or 100% over 30yr treasuries, we'll have 8-9% by end of year, with many borrowers already being offered or experiencing 10%+ by then

dlp211 4y ago

You think that we are going to have continued high inflation through 2026? Based on what?

newaccount2021 4y ago

time_to_smile 4y ago

For anyone relatively young seeing this range and thinking "ridiculous!", it's not. Growing up my parents rate was 12% and in the early 80s rates got up to over 17% [0]. It is very possible for the era of cheap money to end across the board. 0. https://www.freddiemac.com/pmms/pmms30 https://www.freddiemac.com/pmms/pmms30

Ar-Curunir 4y ago
House prices were also much lower in your parents time.
- reggedtorespond 4y ago
  Right, and this is a hard point to overstate. The average home price was around $80,000 in the early 80s, whereas it's currently $525,000. If we see home prices drop by 85% we won't be buying homes with US dollars any more.
  - xboxnolifes 4y ago
    That $80,000 isn't inflation adjusted. Drop would be more like 40%, not 85%. But current home prices don't need to drop. The average price needs to drop. That means more housing. Likely ends up meaning some drop or stagnation in current prices, but you don't need to shift down 40% to reach the goal. Housing in my area is only a little above the 80s price after adjusting for inflation. Of course, the 80s price is nationwide average, while my given price is only the local average.
- czbond 4y ago
  High interest rates on their way up drop the price of homes.
gdubs 4y ago
I recall my parents being very proud of securing a 7% rate in the 90s when they bought our first home. That said, it was a very very inexpensive house compared to today's prices.

izend 4y ago

I'm betting the rates will be back to 2% by 2026 as global growth collapses due to a combination of high interest rates, deleveraging of over-leveraged organizations and geopolitical strife causing further de-globalization.

dehrmann 4y ago

That at least keeps up with current inflation. We'll see what inflation looks like in 2 years.

quonn 4y ago

If so, renting will also be much more expensive

seer-zig 4y ago
Where does the cycle end?