Mortgage Rates Fall Most Since 2008, But Affordability Worst Since 80s

Mortgage Rates Fall Most Since 2008, But Affordability Worst Since 80s

Good news: Mortgage rates fell dramatically last week. Amid a steep decline in US yields, the average 30-year rate dropped 40bps to 5.3%, according to Freddie Mac. That counted as the largest one-week decrease since 2008 (figure below), although it's likely small comfort to prospective buyers still staring at borrowing costs double those seen just six months ago. When combined with the prior week's smaller decline, the two-week decrease amounted to more than half a percentage point -- "not
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3 thoughts on “Mortgage Rates Fall Most Since 2008, But Affordability Worst Since 80s

  1. I got a link to Black Knight’s full report. Nowhere in it is mentioned the words “tax”, “taxes”, or “insurance”.

    So are we to infer that “it takes 36.2% of the median household income to make the mortgage payment (ONLY the principle & interest, and NOT the property taxes and property insurance) on the average-priced home purchase?

    If that be the case, if I was a loan officer qualifying people for mortgages at that ratio, I’d be out of a job because there would be no way in hell I’d give them one.

  2. Mortgage rates probably need to come down more- if spreads go back to where they were 2 years ago – 30 year fixed rates would be 4-4.50%. The Fed terminal rate is probably going to be a lot lower than many pundits think- when that happens mortgage rates will likely fall even more. And that does not even factor rate cuts which will likely unwind half the increase at terminal rates or more.

  3. When the Fed talks about curbing inflation, I believe this inflation is the one they most have their eye on. Housing will probably be the thing that extends this round of QT longer than anyone expects because it will take a very long time to unwind this disaster they helped to create. Until housing becomes some semblance of affordable for a notable period of time I believe rates will continue to push up.

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