Guess what? The cost of financing half-million-dollar, wooden boxes over three decades fell appreciably last week in the US.
Rejoice. Americans can now mortgage their lives away, quite literally, for 7.18%, according to the MBA’s index, which fell 11bps from the prior week.
You can thank Jerome Powell (who murmured his way around a marginally dovish press conference following the May FOMC meeting, at which the Committee unveiled a new runoff cap for Treasurys that was lower than expected) and the US labor market, which did bonds a favor by taking a break from upside surprises.
“Treasury yields and mortgage rates fell last week on news of a slowing jobs market, with wage growth at the slowest pace since 2021, and the Fed’s plans to ease QT in June and to maintain its view that another rate hike is unlikely,” MBA senior VP Mike Fratantoni said Wednesday.
In a testament to pent-up demand and, relatedly, to the idea that the market’s extremely sensitive to meaningful moves in rates, application volume promptly rose 2.6% and refi activity double that.
The good news stops there. A quick check on Redfin’s always excellent news section found Dana Anderson noting that low-income Americans’ share of new mortgages fell to 20.6% last year, roughly where it stood in 2018 and down nearly three percentage points from 2020.
Lower-income households have thus “lost the homebuying progress they made during the pandemic,” as Anderson put it, on the way to highlighting an even more depressing statistic. Americans with “very-low” incomes accounted for just 6% of new mortgages last year, meaning they’ve now lost considerable ground versus 2018, when their share was above 7%.
You’ll never guess where that lost share went: To rich people, of course, who’s share of new mortgages was almost 45% last year.
A separate update penned by Anderson carried this headline: “For the first time in nearly two years, there’s no major American metro where home prices are falling.”
According to Redfin’s data, the median monthly housing payment in America rose 14.7% YoY in the four weeks ending April 28 to reach $2,890, a new record.
As the chart shows, that figure was just ~$1,600 three years ago.
