so fucked. Mortgage rates repriced around 11:00 am today. Nuclear bomb. The 30 year fixed jumped 5/8. We are right about 7% now. All in response to the 10 year US Treasury Note rate going to 3.7% . In basic terms, Investors look to mortgage backed securities or the US 10 year note as safe investments. When the 10 year note yield goes up investors look for higher returns in their mortgage investments to compensate for the risk. So mortgage rates MUST go up. The 10 year note took off today. Q1 2022 the yield was in the 1’s%. Today it is teasing 4%! That change in just 4 months! Welcome to the highest mortgage rates in 20 years, blew by that today. Home builders Lennar and KB announced today that they are walking away from their purchasing rights to 19000 lots. The Volcker tightening in the 80’s drove builders to bankruptcy, don’t see it being much different this time. The builders are stopping construction much sooner now than last time, that might save some from BK. Some but not most. They are busy right now renegotiating prices with buyers who have signed contracts to buy In order to save deals. Those Buyers that bought and have already closed? Only to see current prices in the tract be dropped? Or worse see them go unsold . History repeats itself, 80’s, 90’s 2008, now. Same movie different actor, same ending. 1500 SF house for $1mill to people with 55% debt to income ratios? Dumb. Buckle up. 2023 Q2 numbers will be nasty. Right now we are not seeing a big jump in inventory (houses for sale) and that is mildly surprising. But life events will start happening with layoffs being the biggest ( death, divorce, job transfers etc are other reasons people are forced to sell) and most effective. Politicians are handcuffed until inflation is controlled. Not much they can do. Free market is about to speak, loud and clear. All this points to price drops and buying opportunities. I will have some advice for those that have already bought as we see the shitstorm rain down next year.
it’s a rough way ahead for mortgage rates:
