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Comment by fldskfjdslkfj | Hacker News Reader

Doesn't seem to be much movement in mortgage defaults: https://fred.stlouisfed.org/series/DRSFRMACBS

Thats because anyone with a 2.5% mortgage would rather die before losing their home.

34% of mortgages are below 3% interest rate, which means their house payment is at least 30% cheaper than renting. Nobody is going to give that up easily.

Here you could easily go from a 3/3 single family home to a 2br apartment for the same price monthly. Which means you would need to move into a 1br apartment to save any money.

All this to say, the first thing to go is the credit card payments, then the car payments, and finally the mortgage payments.

This. Anyone I know that has a sub 3% is planning on staying put until their end. The rest of us are never going to see sub 3% in our lifetimes again. 6% is here to stay. Maybe in the distant future we hit 5.5% but unlikely.

I went through a divorce and my ex got the house. I thought I would travel for a few years before buying another one and I missed out on the 3% rates.

I don't disagree but people talking about current rates as if they're terrible distort reality. It really wasn't that long ago (aughts) that rates in the 5/6% range were viewed as historically good. And I'm old enough to remember when rates in the teens were normal.

Yeah, and for a lot of earners in high tax states, the effective interest rate you pay is essentially almost half off thanks to the mortgage interest tax deduction. If your marginal tax rate across federal / state / local is high (mine's 46%), then you can get back almost half the interest. Which shortens the gap between a 3% vs 6% mortgage, the effective difference being more like 1.5% than 3%.

I got a 3.25% loan post-divorce in a part of the country I hated, and ended up selling and relocating. I do not plan on buying again soon, current prices combined with current interest rates make it unappealing. If home prices come off or stagnate long enough, I will once again consider buying. Right now I can set aside $1000/mo renting, which is enough to pay someone else for the hassle of maintaining a house.

6%?! Damn in France we went from 1% to 4% and it felt like the end of the world, 6% is insane

Key to know for people outside the US (if you don't already know this) is that here you almost always deal in 30 year fixed mortgages.

The buyer will never see their rates go higher than this in the life of the loan, and in reality, if/when rates drop again, they can refinance to a new 30 year fixed at the lower rate.

Never say never. It may be a long while til we see 3%, but 5.5% isn't far off. Some saw about that during the recent dip a few months ago.

There are of course a lot of factors, but I think we'll be back in the high fives at some point in 2025 and settle around 4.5-5 after that. That's if Mr Tariff doesn't spike inflation.

Counter point, I have a 2.25% fixed 30yr but am looking to sell in the next couple months.

Reason being I’m in a townhouse. They do not appreciate at the same rate as single family detached and it also carries an endlessly increasing hoa fee.

Due to the hoa increases it also limits how well a property can cash flow as a rental so keeping the property as an investment is doubly less attractive as often you can forgo rental income in lieu of asset appreciation.

HOAs are the only thing so evil that it is more favorable to give up a 2.25% mortgage than to deal with a HOA!

> All this to say, the first thing to go is the credit card payments, then the car payments, and finally the mortgage payments.

I do wonder how much of these credit card balances are people paying ~$3.50 per gallon to fill up and kit out SUVs and trucks they're paying ~$700 a month for.

As someone who strives to spend/save responsibly and drives wholly owned used cars and is still a few paychecks away from disaster, I do not understand how working/middle class people are keeping up with these costs. I notice our local Chevy dealership is also full to the brim (literally covering all of the grass on their lot) with new trucks and SUVs. I would love to better understand who is buying/leasing those vehicles and how they're keeping them on the road -- for now.

Can confirm - if I moved to a home that was the same price ignoring realtors fees and whatnot, my 2000/mth mortgage would go to almost 4.

Wait for all the 2.x% 7/1 and 5/1 jumbo ARMs issued between 2015-2022 to renew at 7%+ and we'll see how strong the mortgage market actually is.

All? I’d be shocked if 5 percent of mortgage originations in the US are ARMs.

They were very low leading into the increased interest rates - 4% in 2021. In 2023 it was closer to 10% of originations.

https://www.investopedia.com/arm-applications-grow-as-mortga...

According to https://point.com/blog/arm-report-2024, ARMs were 10-20% of mortgages 2015-2020

So I think the GP has a good point.

Where is the ARM mortgage data?

Why the hell would you get an ARM when the fixed rate was 3%? The only way to go from there is up.

There are a lot of people just uninformed people that will take whatever deals presented when that deal means getting a house. The person giving them the deal does not care at all about whether they can afford it or not, especially knowing that the loan was going to be repackaged and sold probably before the first payment was due let alone when the rates change

Well, 2015 was about 10 years ago now, and both 5 and 7 are less than ten.

So how about you tell us how some of them have already done renewing at 6%+? Did bad things happen?

Edit: clarification

Credit cards are probably an earlier indicator than mortgages.

It did not become particularly easier to qualify for new mortgages over the past five years the way it did in 2004-2008. Nominal prices accelerated, yes, but rates were around 2.5%.

Generally speaking people who are in mortgages are able to afford them because they're on fairly decent terms and lent to people who are capable of paying. But nobody is selling if they're going to need a new mortgage.

Man, I hate when mortgage defaults are brought up in conversations like this. The next frustration in the economic boom-bust cycle is 99% likely to NOT come from mortgage-backed securities or anything mortgage-based.

Yes, we understand it triggered the 2008 recession.

No, it probably won't be the canary in the coalmine for the next one.

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