Mortgage demand drops to a 25-year low, as interest rates climb – CNBC
Mortgage demand drops to a 25-year low, as interest rates climb CNBC
Mortgage demand drops to a 25-year low, as interest rates climb CNBC
Originally, this was to be a two-part series discussing the pros and cons of buying a home as opposed to investing. The purpose wasn’t to pick a winner or loser, per se. (After all, one of the main tenets of Get Rich Slowly is that you really should do what works for you.) Instead, the purpose was to highlight the strengths and weaknesses of both options in case you were faced with a choice for some reason.
Holly Johnson’s article should you buy a home or (invest?) was first; and she said that, if she had to make that choice, she “would invest for the future and forgo the house in a New York minute.” I intended to explain the benefits of the opposite side of the hypothetical.
But you stole my thunder! So many people made great comments in response to Holly’s post that I thought it would be better to explain what was left over or unclear for some reason. We both started by looking at the past.
As I type this piece on Friday morning, I am at the OâHare aerodrome for a flight from Chicago to San Francisco. OâHare is packed and humming⦠What economic slowdown? Does my opinion on the economy matter any more than yours, or⦠that of the guy running JPMorgan Chase? Last June CEO Jamie Dimon warned of an economic “hurricane” down the road. âHurricaneâ is pretty sensationalist, especially when it hasnât happened. This week he told Reuters that the U.S. economy was in âgood shape.â Itâs a safe bet that inflation will compel the Federal Open Market Committee to hike overnight interest rates above 5% (from the 4.50%-4.75% level it’s at now). The Fed believes short-term rates will continue rising. If you had any questions, two Fed officials on Wednesday essentially echoed Fed Chair Jerome Powellâs hawkish opinion. Yet bond investors seem to be shrugging some of this off! If you knew that something was going to go down in price, you wouldnât want to own it outright, right? Investors are generally piling into notes and bonds with longer maturities even in the face of increased anticipation that the Federal Reserve will substantially hike its benchmark interest rate in the coming months. Go figure! (Todayâs podcast can be found here and this weekâs is sponsored by SimpleNexus, an nCino company and homeownership platform unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution that spans engagement, origination, closing, and business intelligence. For today, an interview with SimpleNexus CEO, Ben Miller, on why borrower experience and technological advancements to facilitate it are so important.)
With mortgage rates expected to climb even higher, lenders are cutting closing costs and launching new programs to court buyers.
A recession is a big decline in economic activity that lasts more than a few months. While scary and difficult, they donât last forever.A recession is a big decline in economic activity that lasts more than a few months. While scary and difficult, they donât last forever.
The post What is a Recession and How Can You Prepare? appeared first on Money Under 30.
The order of business this week has been fairly simple. The market had been telling itself that the Fed would end up cutting rates by the end of 2023 while the Fed had been telling the market that rates would remain at the ceiling level for quite a bit longer. Friday’s jobs report put the market in the mood to listen. Powell delivered the message gently on Tuesday. Williams delivered it more forcefully on Wednesday, but the market had already acquiesced by pricing in at least another 25bp hike in 2022 and completely pricing out the previously foreseen rate cut. The rest of the week is anyone’s guess at this point. Markets look like they’ve found their footing and there’s no new major data to cause a stir. The most actionable items on the calendar after the Fed comments in the first half of the week have been the Treasury auctions. We saw this with yesterday’s 10yr auction and we may see another reaction after today’s 30yr auction. Once again, the longer-end of the yield curve (i.e. 10-30yr bonds) is one of the only ways the market can bet on inflation and growth calming down in a world where the Fed says it is keeping short-term rates higher regardless. The more the market believes the Fed is true to its word, the more we see the yield curve “invert” (i.e. 2yr yields rise higher above 10yr yields). Here’s a longer term look at the curve: And here’s a simpler way to understand what the green line means. In the following chart, we would just subtract the red line from the yellow line to get the green line above. If the red line is higher than the yellow line, the curve is inverted (i.e. the green line in the chart above is in negative territory). Many people will point out that an inverted curve is a surefire predictor of recessions. It’s true that inverted curves frequently precede recessions, but so does everything else. Recessions happen periodically. How long will we wait before the next recession and still insist that this curve inversion is what caused it? The inversion itself doesn’t CAUSE a recession. It’s a symptom of a climate of financial conditions that increases the odds of recession, perhaps. More importantly, we are operating in a different reality than all of the past examples of curve inversions. None of the previous recession-predicting examples occurred in a world with Fed QE. And only the inversion from 1980 occurred in an environment with higher inflation or a tougher Fed policy outlook (that inversion was twice the size of this one, for what its worth). QE may be unwinding, but it is still exerting some downward pressure on longer term rates, all other things being equal. Past inversions also occurred amid much higher outright rates. The Fed’s zero rate policy over the past decade and post-covid meant that short-term rates had nowhere to go but explosively higher once it was time to tighten. It absolutely makes sense for the curve to be inverted (heavily) and it’s really our only shot at a soft landing. A recession would be FAR more likely (and far more devastating) if the curve were not inverted right now, all other things being equal. Bottom line: the inversion is a byproduct of other things that have happened; other things that we already know and understand. It’s a symptom and an effect before it’s a root cause or discrete development.
Many people ask the question is it better to invest in single-family or multifamily rental properties? A lot of investors assume multifamily properties are the better investment because they are built to produce income for landlords. Many real estate investors also say that multifamily properties are the best, but I think single-family homes can be … Read more
The co-founder and CEO of the popular all-women co-working space collective, The Wing, recently spent $3.2 million on a new Brookyn home. And not just any home. The millennial entrepreneur got her hands on Ditmas Parkâs most expensive single-family home, a swanky 4,917-square-foot Colonial Revival property on 18th Street. While properties in the area (known for […]
The post Audrey Gelman’s New NYC Home is Full of Character (and Color) appeared first on Fancy Pants Homes.
It turns out 2017 was a banner year for mortgages, just not all of them. A total of $1.148 trillion in home purchase mortgages were funded last year, the highest total since 2006, per new data from Inside Mortgage Finance. I guess if we consider inflation, and the fact that it has been over a… Read More »2017 Was the Best Year for Home Purchase Mortgages Since the Market Peak
The post 2017 Was the Best Year for Home Purchase Mortgages Since the Market Peak appeared first on The Truth About Mortgage.