Or bloody friday. Mortgage Backed Securities went “no bid” for a while. Meaning there were no buyers now that the Fed has stopped buying. Rates immediately shot up 87 basis points on the 30 year fixed loan taking it above 6% for the first time in a long fucking time. Investor loans are almost 8%. 60 days ago rates were right around 3%. So if you started looking for a home 2 months ago and are still looking or you entered escrow and didn’t lock your rate, your payment has gone up over $1200 per month for the same house. In many cases higher.
Buyers heading to the sidelines in droves. They prefer the “let’s wait a few months and see what happens”. Smart. Investors have checked out. No investor activity.
Sellers will panic further now and put their properties on the market so as not “miss the cash out boat”.
Which will create a larger inventory and eventually price reductions. Once reductions in values start, just like increases , they get a momentum all their own. rates is just one red flag. The price of gas and food will put a pinch on all those that stretched their budgets to buy an overpriced house. You have to eat and you have to drive, so you skip a few mortgage payments and then more. And so it begins.
That’s gloom and doom, here is the flip side. Opportunities to scoop up investment properties at great discounts. Short Sales.
The price of lumber is dropping like a rock. Why? Builders see the wave coming and have reduced orders in a big way. Replacing a roof? Or adding square footage, prices coming down there.
In May of 2021 the average credit score on funded cash out loans was 732 , Purchases averaged 734 and no cash out refi's 731.
Today, a year later,
credit scores are holding for purchases, no cash out refi's have dried up. But cash out refi's average credit score is down to 698.
Cash out refinances are the riskiest and most likely to default. Lenders are scraping the barrel for more busi ness. look for these credit scores and underlying risks with credit quality to continue deteriorating. Not subprime yet but getting closer
T
look what happens to home prices in a rising rate environment like we saw in the 70's early 80's. Prices dropped. the rising rates were in response to high in flation, just like we are seeing today.
Interesting, thanks.… Not surprised at all. Many “experts” in disagreement over why so many different US markets are taking a hit. WHAT ABOUT QE?!?! And yes, that shit was intentional.
I haven’t visited this board in awhile. Most interested in your housing forecasts. Thanks again.