The 30-Year Fixed Mortgage Rate just hit 5%. And some home buyers are even getting quoted over 6%. That means the annual mortgage cost for new home buyers is now over $22,000.
This is 35% higher than the previous peak in the 2007 Housing Bubble. The result is that Debt to Income Ratios for new homebuyers are now hitting 40%.
These sky-high Debt to Income Ratios indicate that Banks are starting to make bad and risky loans in the 2022 Housing Market. Similar to what they did in the mid-2000s. Back then a devastating wave of Foreclosures and Short Sales hit the US Housing Market.
A similar situation could play out over the next several years as Home Buyer wages and incomes have failed to keep pace with the rate of appreciation and the surge in Mortgage Rates. The result could be one of two things:
1) Banks stop making loans/mortgages all together because so few new homebuyers qualify.
2) Banks make even riskier mortgages going forward and a repeat of the 2008 Financial Crisis / Housing Crash plays out.
Both situations would be bad for the Housing Market and result in Home Price Declines.
FHFA Mortgage Data (New Residential Mortgage Stats Monthly): https://www.fhfa.gov/DataTools/Downloads/Pages/National-Mortgage-Database-Aggregate-Data.aspx
Long-Term Mortgage Rates:
https://fred.stlouisfed.org/series/MORTGAGE30US
Mortgage News Daily:
https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed
Case Shiller Home Price Index:
https://fred.stlouisfed.org/series/CSUSHPINSA
Zillow Home Values:
https://www.zillow.com/research/data/
—
JOIN as a Reventure CHANNEL MEMBER:
https://www.youtube.com/channel/UCVTQunGrE3p7Oq8Owao5y_Q/join
INSTAGRAM: https://www.instagram.com/reventure_consulting/
TWITTER: https://twitter.com/nickgerli1
CONACT US: https://reventureconsulting.com/contacts/
DISCLAIMER: This video content is intended only for informational, educational, and entertainment purposes. Neither Reventure Consulting or Nicholas Gerli are registered financial advisors. Your use of Reventure Consulting’s YouTube channel and your reliance on any information on the channel is solely at your own risk. Moreover, the use of the Internet (including, but not limited to, YouTube, E-Mail, and Instagram) for communications with Reventure Consulting does not establish a formal business relationship.
Image(s) and/or Footage used under license from Shutterstock.com. https://www.shutterstock.com/
Additional stock footage provided by Videvo. http://www.videvo.net/
#MortgageRates #HousingCrash