Mortgage rates soar to their highest level in 21 years | Hacker News Reader

Mortgage rates soar to their highest level in 21 years

cnn.com

20 pointspg_123425 comments

I feel bad for anybody who has to buy or has to sell. The Fed pumping so much money into the system and lowering interest rates really screwed things up, and these rate hikes are also going to screw things up as well.

Or at least painfully un-screw them.

You can't JUST blame the fed though - the more direct way the government pumps up prices is through mortgage buying via fannie and freddie - yes, at low rates set by the fed.

Don't feel bad for buyers though - they're getting houses at the same monthly payment at a much lower purchase price than otherwise. And if/when rates go back down later, then they can refi to a lower payment as well. And they get to stick it to the next buyer with a higher price.

So yes, I agree with you.

I don't see it. I looked into moving this year, house prices have stayed flat in my area and haven't gone down. rates are double my current, and house prices are huge. a move for me would mean nearly 30% increase in monthly payments for a comparable home in a comparable location. we opted not to move and will try again in a few years

Housing prices may not have gone down - but absent rate increases they would have gone up.

So then buyers aren’t getting houses at the same monthly payment at a much lower purchase price than otherwise.

Yes, in the short term, monthly rates have gone up due to the time it will take for the benchmark rate to push asset prices down. Eventually (at least that's the idea), unaffordable monthly payments should come down to affordable payments as sellers are forced to accept lower prices due to what wages can support. Increased supply would help, which is why if you must buy, new construction is preferable to used homes. New builders must sell what they build to remain in business, existing real estate owners can afford to wait (some longer than others).

It's tricky. If you were an economist you'd insist that if interest rates go up housing prices must go down. If you're anyone else you realize rates goes up, supply of houses for sale goes down because people don't want to move.

Certainly not that way in my area, Phoenix suburbs. Barely anything is being listed anymore and prices are still around where they were a year or 2 ago.

Advice I got from some one in real estate is buy the house, not the rate. Rates change over time, one can probably refinance in the future.

Yea, were they trying to sell you a house yesterday?

Actually yeah, I bought one on the spot! Hur dur

You say hur dur to suggest that was a stupid comment, but it's actually super relevant. The person who told you that has an interest in you buying. They don't care if it's good or bad financially. But you're here repeating this "advice".

I said hur dur to suggest im stupid and dont know what im talking about

Thirty year mortgages have always been a bad deal. No different now.

They were sitting at 2-4% for about a decade in the US. Pretty great deal if you ask me

Can confirm, was a good deal

Can you elaborate? Compared to 15 year, or renting, or paying cash?

How is a 30y mortgage of 2.5% from two years ago a bad deal, when rates are now at 7%? That is mid six figures of $ savings.

This. Even if you could buy the house outright for cash, it still would have made sense to get one of those mortgages, base on that (reasonable even at the time) expectation that risk free rates would swamp that value soon enough, and, no surprise, here we are!

I was pondering that tradeoff myself two years ago, having retired early from crypto. The only issue is, to get the 2.5% you had to show Fannie Mae-acceptable regular income. Which is still possible: the FIRE people have a system for putting your money in a trust that pays it right back to you[1], then waiting two months to establish a history, and then you dissolve the trust once the mortgage is finalized and you've closed and moved in.

I would have done that myself except that it would involve putting a big delay on my search. Early comment about it: https://news.ycombinator.com/item?id=31000286

[1] https://old.reddit.com/r/fatFIRE/comments/ojs18l/obtaining_a...

The 30 year fixed mortgage is a product that gets massive implicit government subsidies. It is a terrible deal for the American taxpayer. Note that this product can simply not be available in other countries.

Are you trying to claim it's a bad deal for the mortgagor? That is a claim that's going to require quite a lot of evidence.

That's wrong, long term exist rates exist all over Europe. France has very popular 20 year fixed mortgages at great low rates, 30 years are not uncommon. Before recent inflation causing rate hikes, you could access interest rates between 1% - 3% for these types of deals

Can confirm. I have 30 year fixed at 1.2% here in Spain

I fixed the wording to be more clear about what I meant. These are also often subsidized products.

Long-term fixed rate is still a relative rarity globally, especially in the US style where there are no prepayment penalties. France is a notable exception, as specified in https://business.sdsu.edu/research/_files/_realestate/intern... , but still doesn't have the prepayment-penalty-free nature (though prepayment penalty amounts are capped by law).

Just to double check, are you sure those 30 year are fixed?

I have a 25y mortgage at 1.28 fixed. I accessed it less than 3 years ago. Italy

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