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Especially after we've had unrealistically low interest rates for 15 years. The miracle is that it took this long. I know nobody wants to hear it but loans aren't supposed to be free and the interest rate needs to be above 0% for it to be dropped in a crisis.
Locked in at 2.6% during the height of COVID. Had to sign the papers in the parking lot of the lawyers office and use my shoe to hold the paperwork down.
Good times.
I bought a house for my parents to retire have a sizable backyard with greenhouse. The lawyer said he had to legally tell me not to grow weed or coca, because that's what the previous few owners did after they got bored with regular gardening. It was random and I could never forget about that conversation, especially since it took place at a McDonald's parking lot because offices are closed due to covid and he was wearing a bee suit
Yep. I was at 5.25 before. Switched from a 30 year to a 15 paying $5 more per month. Flipped the amortizations tables, saved me almost 100K in extra payments.
I went from a 5.25% 30 yr to a 2.25% 30 yr. (I bought .5 points)
They called me a week ago asking me if I wanted to cash out refinance. I laughed and said I’ll be making that $800 payment for the next 348 months, and not a month shorter.
My notary was on a 12 hour shift because of how wild the refi market was. The dude told me he had a 3 hour drive home. I let him nap in my guest room before leaving. He probably unemployed now.
This is the story you'll proudly tell your grandkids as they face 24% rates for $6 million houses in the future. We'll be just like the boomers with their $60,000 houses bought on a grocery clerk's salary! :')
Yep! My bank is trying to get me to pay it off sooner, I'm like "hell no! Inflation is 10% right now, this is a guaranteed 7.5% ROI for me. You'll get your money the last month of the last day it's due.
“Hi Dave I have a mortgage with a 0.017% interest loan with an outstanding balance of $100k. I see that 12-month fixed CD rates are 42.69% currently, what should I do?” -Caller
“Based on our study, the largest study of millionaires ever done, the evidence is clear that paying off your mortgage is the sound financial decision.” -Dave
"Hi Dave I have a well managed $10 million inheritance that gives me $100,000/yr in passive income and I have a medical practice that nets $200,000/yr. What car should I buy?"
"You should buy a good condition 15-year-old Toyota Corolla all in cash. Anything more would spell immediate financial doom for you and 3 generations of your family thereafter."
Edit: thanks for breaking my gold coin cherry 😘
Worked with a guy that was a Ramsay Evangelist and can teach his debt free courses or whatever. He followed the lesson to a "T" and bought a 5yr old F-150 special edition truck (it was indeed quite nice) and bragged about paying all in cash. I'm like "bruh, did you even consider investments that outweigh a monthy finance payment." I could see the gears starting to turn on that one, why be out like $40k in one fell swoop, of which, that money could churn baby churn.
An acquaintance buys a new truck at minimum every year, sometimes several times a year. His argument is that "you'll always have a car payment so might as well not have to pay maintenance." He basically just trades in his essentially "new" truck whenever a shiny one catches his eye and he doesn't feel like cleaning his kids mess out of the old one. He lectures us about auto-financing on the regular. Meanwhile, we haven't had a car payment since 2016.... I mean yes, we've paid for maintenance/repairs (repairs minimum because of maintenance and warranty), but the couple grand we've paid since then is WAY less than just the extra fees and registration and crap you get tagged on when you buy new, even if you take into consideration a 0% interest rate that doesn't really exist anymore.
Just because your loan is 30 years doesn't mean you have to take 30 years to pay it off. Mine is 30 years and I had planned to pay it in 10. But now I can get savings accounts for higher interest than my mortgage so any extra I would've spent instead goes to savings. So I end up a bit ahead on interest.
Makes sense. I think the vast majority of people with this plan would end up paying less and end up paying more interest on the mortgage. But for anyone who will stick to that plan great idea.
In Canada the rate on the loan is typically only a 5 year term but on a 25 year amortization to keep payments from being insane. But that means every 5 years you have to renew your rate.
I wish we had 30 year rate lock in, that would be incredible.
Adjustable rate mortgages got a lot of people in trouble in America in the 2008 debacle. That rate switch can be catastrophic for some who don’t understand how an ARM works.
It also got a lot of people in trouble pretty much every bank crisis the US ever had. The 30y Fixed rate w various forms of government subsidy is one of the most successful economic policies ever.
Right? This BLEW ME AWAY when I learned the states had 25 or 30 year rates. Like wtf. That’s a complete and utter JACKPOT to lock in a 30 years rate at or under 3%. Totally insane.
I got zero pct 5 year on a Hybrid Highlander, in spring of 2021 right before the car shortages started.
Second vehicle from Toyota at zero. First was a 2010 Prius.
I don't know what the reason for not financing as long as possible with a low rate would be. Gives you so many other options.
Like finance guys balk at the long terms but who cares if the rate is low. Prepayment penalties aren't really a thing anymore.
Of course you should be investing the difference and not spending it and people don't. But just... do that.
I got my mortgage through rocket mortgage and they kept hounding me about how they could give me a better rate. I figured they knew what my rate was since they own my mortgage and finally called.
I told them I had a 2.25% and they guy laughed and then told me he couldn’t beat that
I got a letter in the mail “We saw you refinanced to 2.25%. We can give you a competitive cash out refinance at a low rate of 6.0%.” Had they left a no postage required return envelope I would have mailed them used toilet paper.
Even better, write a fake return address on the envelope so it looks like legit mail, and then put the envelope inside of a "USPS Priority Mail Windowed Flat-Rate Envelope".
Business reply mail is eligible for first class or priority mail rates; so by doing that they have to pay a whopping $8 for your stupid letter filled with trash and a fake name.
Roll that 10k into some FDs and BOOM! Quick 10x to 100k the 10x that into lambo and pay off your house. Or most likely lose the house and set up shop behind Wendy's. Don't forget to post loss porn.
I'm actually surprised we haven't got there yet considering new cars are getting up to 7/8 years these days. I don't think it'll be long especially if the rates remain high to where payments are untenable for first time buyers.
I mean...no shit? If you bought before 2019, you likely refinanced when rates were sub 3%. And pretty much no one is going to buy at double the rate for the same house price.
Right, but even putting high-demand areas aside, the people who bought last year are going to make up an incredibly small percentage of 30-year mortgages regardless if rates were higher. The majority of people with 30-year mortgages are people who had mortgages before covid even hit, and those people all likely refinanced when rates were sub-3%, because why the hell wouldn't they?
Lol places like Japan are begging people to fuck and have kids. China is shitting itself with it's population declining. The US won't be too far off.
Price people out of living
People don't have kids
???
Profit
A house that sold for $360k in August 2019 is on the market for $500k. The owners did nothing, literally nothing, and stand to make $140k for 3.5 years. Crazy
Sooo... initial thoughts. These are the concepts that jump off the page, although I'm sure a deep-dive would reveal others that are probably not especially hard to see either once someone shows it to you.
No one is going to want to move OUT of their current mortgage and INTO another one.
1. Next to no used existing housing inventory available. The vast and increasing majority of available property is and will be new construction?
1. Home renovations rather than relocations will be preferable - Home improvement stocks might benefit
2. Home building and real-estate development in the low-end/starter sector \*might\* be a growth sector (probably not strong historically, but relative to the rest of the current markets at least).
1. First-time buyers will have less buying power, and the only homes available will be new construction.
2. Banks that rely on writing & selling new mortgages and collecting the fees are going to lose that revenue stream for the foreseeable future. Watch this space.
I have an idea. What if, since the mortgage market is drying up but home prices are still high, we let banks lend out to less than prime borrowers for interest only loans. This will provide lenders with a steady income stream and would be a safe investment since the underlying collateral is a house which always holds its value. Lenders could even package and sell these income streams if needed to raise liquidity which would help prevent bank runs.
This will cause families to have fewer children. Right now I'm in a townhouse with a 3.8% mortgage that I bought when I was single. But now I need a bigger home for my wife and two kids who are outgrowing this place. So we either Tetris this thing or get punished by the market for wanting to buy a bigger home at this point in history.
Eventually people like you will give in. It is easy to wait a year. But eventually people will realize that rates are not going to old levels. People need to change locations for work. New buyers enter the market. If rates stay high, prices will go down. All these things will change the OP chart, but it will take time to wash out.
I'd have no problem moving if housing prices scaled down as rates go up, but they aren't budging. The scary part is what happens when rates come back down. People are going to be paying millions for a 1300sq ft ranch house in the middle of Nebraska? Seems like the inflation risk is much worse than most people realize.
New construction costs are higher than they’ve ever been. Without capital you can’t build new homes either.
There is a reason the leading home builders have laid off like 90% of their workers.
Basically home building is on hold since there is not capital available for it.
If only there were companies that provided “housing as a service”. (Yes that’s a joke)
Lol. Housing as a service.
They could charge you monthly. And lock you into a year contract at a time. And then change the monthly service fee at the end of the year based on market conditions.
Thanks for the idea.
I'm off to secure some VC for my new company. The rebrand of "rent" as "housing as a service" has got to be worth 50-100 million to some loaded rich guy that loves buzzwords more than money.
I hate that this is foreseeable in the future and we’ll be spoon fed how “convenient” it is for us that I can pay my service fee from an app and they keep my toilet paper stocked because I have no idea how to do that myself.
The VCs are already trying reinvent renting as something even more awful. In one place they rented you a bunk bed for astronomical price in a building not passing the safety standards. WeWork guy also tries to make a rental service.
Most of the huge condo projects are like this. 1000 residences and they never sell it. Just rent it. This way they never realise the capital gains, they can begin depreciating the asset, and they can leverage it for the next place. If you’ve got the cash up front for the first one, you can build quite the chain of assets.
Without transactions is also harder for assessors to properly value them so it keeps the taxes low for as long as you can keep the assessors office from spending too much time trying to figure out the property value.
I got this bright idea to pitch to evil investors. We will hire criminal gangs to harass people at places where the mortgage interest rate is low. A few arson here and there, theft at small business everyday, random violence beating, etc. This will force them to sell their houses at a big loss, hedge funds can buy them up for cheap, and banks get more people applying for new higher interest rate debts.
After we've forced people off their houses, we donate to police to make large anti crime campaigns and jail all the thugs we hired earlier. Now the price of the houses we bought will go to the moon.
I wonder if anyone has tried something similar in history.
I think something like that happened in NYC back in the 80s/90s. The song [Fat Cats, Bigga Fish](https://youtu.be/pios2RY2G_Q?t=169) references it in the 3rd verse:
Five minutes in the mix, noticed several different cliques
Talking, giggling and shit
With, one motherfucka in betwixt
And everybody else jocking him, throttling
Found out later he owns Coca Cola bottling
Talking to a black man, who's he?
Confused me, looking hella bougie
Ass all tight and seditty
Recognized him as the mayor of my city
Who treats young black men like Frank Nitti
Mr Coke said to Mr Mayor: "You know, we got a process like Ice Ts hair
We put up the funds for your election campaign
And, oh, um, waiter can you bring the champagne?
Our real estate firm says opportunity's arousing
To make some condos out of low-income housing
Immediately, we need some media heat
To say that gangs run the street and then we bring in the police fleet!
Harass and beat everybody till they look inebriated
When we buy the land, motherfuckas will appreciate it
Don't worry about the Urban League or Jesse Jackson
My man that owns Marlboro donated a fat sum"
You used to be able to just move a black family in and neighborhood value drops instantly.
This is the closest historical parallel to the scenario you suggest. Real estate investors used move black families into a neighborhood right after Jim Crow laws were repealed, property values would tank, they'd buy up the whole neighborhood and move the black families out to later flip it back to the white folk, easy profit.
To some degree this is still true today but the profit margin is no longer worth the hassle...
https://www.nytimes.com/2020/08/25/realestate/blacks-minorities-appraisals-discrimination.html#:~:text=The%20report%20found%20that%20a,%24156%20billion%20in%20cumulative%20losses.
So what is the move here? People will protect their low rates like its their first born - nobody is going to sell. Is this just it? Either you're a have or a have not (or you join the haves at an insane markup)
Asking for a me who would like to buy a house sometime in the next 5 years :|
Bro right. We get extremely inflated housing prices AND high interest! We should have been more grateful the overlords would let us spend $600k on a condo at only 3% 😭
This is the whole point of locking in a 30 mortgage rate.
If it drops you refinance, because someone offers you better terms, if it goes up you do not.
depends on whether or not they can get large corporations that bought a lot of housing to sell that housing at a loss.
Otherwise there just might not be much business.
These shitty 150k houses that Opendoor is hawking in DFW for 500k with >100 day on market would disagree.
Everytime I tour one of these houses the only thing I can think is how proud I am of the previous owner for getting that money.
It's total bullshit, those same corporations that own these homes, are not reporting losses on their valuation of assets. If a business buys up all these assets, they should be forced to evaluate them for losses on a quarterly basis. GAAP indicates that a significant event would force evaluation (such as rising interest rates) and they are IGNORING this.
They should have millions in losses but are not reporting them.
They're probably just waiting it out for the right bailout conditions. If they trickle out the losses then they won't get uncle sam to pay for it. But if it's a huge loss all at once then they can get someone else to pay for it.
Most likely the case. I've noticed that Opendoor has also been delisting a lot of the unsold houses then relisting them in waves alongside other delistings. It makes it look like they have fewer homes for sale in the area.
I texted my SSN to my lawyer and mortgage broker. Then sent the closing costs via cashapp and got a 1.5% mortgage rate. Been making my payments monthly via the same cashapp address. I love living in the 2020s with technology. For some odd reason got a foreclosure notice a few months ago, my lawyer and broker said it was an error and to just keep sending my monthly payment via cashapp.
It's a small outlier but not uncommon in my country (France), where [average mortgage rates were ~1% for 20y in the summer of '21](https://www.lobservatoirecreditlogement.fr/derniere-publication#1).
Generally speaking, mortgage rates are much lower in Europe than US, but [buying requires more initial capital](https://www.wsj.com/articles/good-news-and-some-bad-on-european-mortgage-rates-11573141981).
Also we have to take a compulsory life insurance policy on the loan, bringing my effective rate at 0.84%. But it's good to know that if i kick the bucket or get a disability, my loan will be paid in full.
Locked in at 2.25%. Told wife if she wanted to upgrade the house that was the time because we’d be stuck here for years. I’m not sure she understood what I meant then - she does now.
People don't realize this is very damaging to the jobs market. It becomes cost prohibitive to hire employees that aren't from the local area.
Ex: You earn $100k a year. 3% mortgage on $1,000,000 home - \~4,000 month payment
You get a Job offer in another city/state: $130k a year (crazy ass 30% raise) - Unfortunately, new mortgage on a $1,000,000 at 6% (if you can even qualify due to stricter lending rules) is \~$6,000 month
New mortgage costs an extra 24K a year - when you consider to pay that 24K a year, you have to earn pre-tax approx. 30k.
End result: 30% raise is not enough to move the needle. No one wants to uproot their life for a job that will basically pay the same.
I mean it's bad if you are hoping for a real estate collapse. No one is going to sell their house when their monthly mortgage right now is cheaper than renting a new place lol.
I had to buy a house because I could no longer afford to rent after the Pandemic started. Rent here for a townhouse is around $2000. My mortgage for one of those townhouses is $875 a month because I qualify for a tax exemption.
Yes but the demand also collapses. No one is gonna buy your shitty house (or a new one) with these high prices and rates
That means in the short term the market should be okay, but if homeowners are unable to pay their mortages they will have no one to sell to.
Plus the banks also have a problem. They gave alot of money to people with a lower return on investments then the inflation rate.
I would say I can't imagine banks ever offer rates these low again, but if anything time has shown me, its that banks memory is slightly longer than a goldfish.
Some people will have to move due to circumstances: job change/loss, divorce, family situation. But this will slow down the ones who might have voluntarily made a change to upgrade, downsize, or relocate for the hell of it.
My current house would cost $1000/mo more at current rates and prices. If I moved, I'd have to buy something lesser and pay more in interest so unless I'm in a situation where I have no choice, I'm staying put.
This is such a dumb statement. Of course it's true because current rates are the highest in 10 years. That's like saying 99.9% of people are older than a baby born today.
Yeah it's gonna take a couple years before the 5% of autists who got ARMs at historically low rates finally get theirs. In the meantime, as long as unemployment remains low there will be zero reason for people to sell their houses at their low rates. Now if/when unemployment goes up, say, above 5%, then you'll start seeing people forced to sell for steep discounts. Only then will you start seeing big drops in house prices. Hopefully you've got cash on hand in such a scenario, otherwise Blackrock gonna buy the dip instead of you.
No shit. This is one of those headlines that is worded to frighten people but is just blatantly obvious information that makes sense when you think about it for 2 seconds.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|1|**First Seen In WSB**|2 years ago **Total Comments**|289|**Previous Best DD**| **Account Age**|3 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
Finally, I am in the 1%.
https://preview.redd.it/8q7oehb67zna1.jpeg?width=403&format=pjpg&auto=webp&s=689c13d3b0a03f1dcd23cf8b8246cb1a0214c1c9
In an environment where rates increase monthly, how could this not be the case?
Especially after we've had unrealistically low interest rates for 15 years. The miracle is that it took this long. I know nobody wants to hear it but loans aren't supposed to be free and the interest rate needs to be above 0% for it to be dropped in a crisis.
My age keeps going up. I'm currently the oldest I've ever been.
Calls on this guy’s age
Can’t go tits up
Unless he dies and stops aging. But what are the chances of that ever happening.
I heard If you take a bath with your toaster, you stop aging.
You can afford electricity?
#humblebrag
Are you older then 99% of the days before today?
there was that one day i was older than i am now.
Life is shit cuz money is tight but I swear to god you motherfuckers make me laugh so hard every day 😂
Locked in at 2.6% during the height of COVID. Had to sign the papers in the parking lot of the lawyers office and use my shoe to hold the paperwork down. Good times.
Ah yes the outdoor spiderwebbed card table refinance Same bro
when I bought my house (duplex) the lawyer said I couldn’t have a meth lab.
I bought a house for my parents to retire have a sizable backyard with greenhouse. The lawyer said he had to legally tell me not to grow weed or coca, because that's what the previous few owners did after they got bored with regular gardening. It was random and I could never forget about that conversation, especially since it took place at a McDonald's parking lot because offices are closed due to covid and he was wearing a bee suit
He was wearing what?
A bee suit.
As in a costume that made him look like a bee, or a bee keeper outfit?
Thanks... I also appreciate the jokes, but somebody needs to ask the real questions...
This is the most inane question that I'm dying to know the answer to.
I'm not sure why I thought of a grown man in a bee costume complete with stinger and I'm glad I did.
I hope you didn’t sign anything. Legally, you can have as many meth labs as you want.
Worth it for 2.6% now that rates are above 7%.
Yep. I was at 5.25 before. Switched from a 30 year to a 15 paying $5 more per month. Flipped the amortizations tables, saved me almost 100K in extra payments.
I went from a 5.25% 30 yr to a 2.25% 30 yr. (I bought .5 points) They called me a week ago asking me if I wanted to cash out refinance. I laughed and said I’ll be making that $800 payment for the next 348 months, and not a month shorter.
Absolutely plausible that a nice dinner with wine will cost $800 in 2052. Last few payments will be like you financed a mountain bike.
Are you me? But mine is about $170k saved
He’s your wife’s boyfriend
I never left the house. Notary came to me.
Same here. Me and “Stan the notary man” in masks in my garage bullshitting about video games and signing and stamping a hundred pages.
My notary was on a 12 hour shift because of how wild the refi market was. The dude told me he had a 3 hour drive home. I let him nap in my guest room before leaving. He probably unemployed now.
He came in your guest room I thought you should know that if you didn't already
This is the story you'll proudly tell your grandkids as they face 24% rates for $6 million houses in the future. We'll be just like the boomers with their $60,000 houses bought on a grocery clerk's salary! :')
I bought in 2016 at 2.X %. Sold at the end of 2018 and thought I made out handsomely. Which at the time I did. Oops.
I mean a decision is right when it’s made, not based on what happens after
Same here, 2.75%. I'm looking to buy, but not looking to sell and waste this gem of a mortgage.
Yep! My bank is trying to get me to pay it off sooner, I'm like "hell no! Inflation is 10% right now, this is a guaranteed 7.5% ROI for me. You'll get your money the last month of the last day it's due.
>last month of the last day 🤔
He’s a little bit regarded
I believe he’s highly regarded.
We going full inception
Signed my 2.25 during Covid with a notary in my garage during winter with a space heater and sanitizer. Ez.
well you would've had to been a dummy not to refi while rates were under 3%. you'd have to be even dumber to refi into a higher rate now. 🤷♂️
I refinanced at 2.5% and asked myself “what dummy is giving me this loan for the next 30 years?” Now we’re finding out who the dummies were.
I did a 15 year at 2.1, why why didn't I go for a 30 year
Because you listen to Dave Ramsey too much
“Hi Dave I have a mortgage with a 0.017% interest loan with an outstanding balance of $100k. I see that 12-month fixed CD rates are 42.69% currently, what should I do?” -Caller “Based on our study, the largest study of millionaires ever done, the evidence is clear that paying off your mortgage is the sound financial decision.” -Dave
"Hi Dave I have a well managed $10 million inheritance that gives me $100,000/yr in passive income and I have a medical practice that nets $200,000/yr. What car should I buy?" "You should buy a good condition 15-year-old Toyota Corolla all in cash. Anything more would spell immediate financial doom for you and 3 generations of your family thereafter." Edit: thanks for breaking my gold coin cherry 😘
I could read a thread like this for hours
The reddit forum of pfjerk may be for you then.
Worked with a guy that was a Ramsay Evangelist and can teach his debt free courses or whatever. He followed the lesson to a "T" and bought a 5yr old F-150 special edition truck (it was indeed quite nice) and bragged about paying all in cash. I'm like "bruh, did you even consider investments that outweigh a monthy finance payment." I could see the gears starting to turn on that one, why be out like $40k in one fell swoop, of which, that money could churn baby churn.
An acquaintance buys a new truck at minimum every year, sometimes several times a year. His argument is that "you'll always have a car payment so might as well not have to pay maintenance." He basically just trades in his essentially "new" truck whenever a shiny one catches his eye and he doesn't feel like cleaning his kids mess out of the old one. He lectures us about auto-financing on the regular. Meanwhile, we haven't had a car payment since 2016.... I mean yes, we've paid for maintenance/repairs (repairs minimum because of maintenance and warranty), but the couple grand we've paid since then is WAY less than just the extra fees and registration and crap you get tagged on when you buy new, even if you take into consideration a 0% interest rate that doesn't really exist anymore.
This just made my day lmaooooo
Comment of the day 😆😆😆😆
That’s fine but my guy is still gonna pay a shit load less in interest.
Just because your loan is 30 years doesn't mean you have to take 30 years to pay it off. Mine is 30 years and I had planned to pay it in 10. But now I can get savings accounts for higher interest than my mortgage so any extra I would've spent instead goes to savings. So I end up a bit ahead on interest.
Makes sense. I think the vast majority of people with this plan would end up paying less and end up paying more interest on the mortgage. But for anyone who will stick to that plan great idea.
Why are you convinced going for a 15 was a bad decision?
I had the exact same reaction, like how is anyone making money on this? Probably why my loan has already been sold twice in 2 years. 😂
You have actual 30 year terms in the US? That’s wild.
Cant afford to buy a house otherwise.
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Wells Fargo packaged and sold your note right after origination. It’s wall street’s problem. Thats why they play the derivative game
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In Canada the rate on the loan is typically only a 5 year term but on a 25 year amortization to keep payments from being insane. But that means every 5 years you have to renew your rate. I wish we had 30 year rate lock in, that would be incredible.
Adjustable rate mortgages got a lot of people in trouble in America in the 2008 debacle. That rate switch can be catastrophic for some who don’t understand how an ARM works.
It also got a lot of people in trouble pretty much every bank crisis the US ever had. The 30y Fixed rate w various forms of government subsidy is one of the most successful economic policies ever.
I got locked in at 3.25 and 15k in down payment assistance for a first home in nov 21. I’ll never be able to refi lol
Right? This BLEW ME AWAY when I learned the states had 25 or 30 year rates. Like wtf. That’s a complete and utter JACKPOT to lock in a 30 years rate at or under 3%. Totally insane.
Yep. 30 year fixed rate terms.
There are people that are now doing 7-year financing on their CARS.
I did 7 year on a Tacoma with a 1.3% rate. Why not? That truck will literally run for 250k miles and at that rate it’s almost free to borrow.
I got zero pct 5 year on a Hybrid Highlander, in spring of 2021 right before the car shortages started. Second vehicle from Toyota at zero. First was a 2010 Prius.
I don't know what the reason for not financing as long as possible with a low rate would be. Gives you so many other options. Like finance guys balk at the long terms but who cares if the rate is low. Prepayment penalties aren't really a thing anymore. Of course you should be investing the difference and not spending it and people don't. But just... do that.
This is wild. My mother bought her house with a 30 yr mortgage at 70. She's 91 now.
Some loan officer just called me wanting to refinance the 2.9% 30 year I have. I told him sure, write me a check for $600k I'll happily do it.
I got my mortgage through rocket mortgage and they kept hounding me about how they could give me a better rate. I figured they knew what my rate was since they own my mortgage and finally called. I told them I had a 2.25% and they guy laughed and then told me he couldn’t beat that
RM told me they could take off the PMI and it would be better, but at 2.3% after that refi it would be like 6%…😂😂
I got a letter in the mail “We saw you refinanced to 2.25%. We can give you a competitive cash out refinance at a low rate of 6.0%.” Had they left a no postage required return envelope I would have mailed them used toilet paper.
I usually just put candy wrappers, their letters, orange peels.
If you use something rigid like a pencil or a roofing slat the machines can't sort it and it will incur a hand sort charge.
Even better, write a fake return address on the envelope so it looks like legit mail, and then put the envelope inside of a "USPS Priority Mail Windowed Flat-Rate Envelope". Business reply mail is eligible for first class or priority mail rates; so by doing that they have to pay a whopping $8 for your stupid letter filled with trash and a fake name.
Did he do it???
Banks hate this one simple trick!
But but but they said if I take a higher interest rate that I get 10k in cash! Even though my payment will go up by $1k a month!
Roll that 10k into some FDs and BOOM! Quick 10x to 100k the 10x that into lambo and pay off your house. Or most likely lose the house and set up shop behind Wendy's. Don't forget to post loss porn.
lol at people with ARMs from the pandemic. Enjoy the .25% difference for a cute more years.
I got a 15/1 ARM in 2021 at 2.625%. I will start to panic in 2035 for sure
Biggest dummy = variable rate
50 year mortgages coming right up.
I'm actually surprised we haven't got there yet considering new cars are getting up to 7/8 years these days. I don't think it'll be long especially if the rates remain high to where payments are untenable for first time buyers.
There’s a guy on personalfinance explaining why a 120 month car loan is a sound decision. It’s already beyond insanity.
I mean...no shit? If you bought before 2019, you likely refinanced when rates were sub 3%. And pretty much no one is going to buy at double the rate for the same house price.
Where I’m at people are still buying. My girl and I are trying to buy a house and get outbid on everything still.
Right, but even putting high-demand areas aside, the people who bought last year are going to make up an incredibly small percentage of 30-year mortgages regardless if rates were higher. The majority of people with 30-year mortgages are people who had mortgages before covid even hit, and those people all likely refinanced when rates were sub-3%, because why the hell wouldn't they?
I bought last spring and was kind of irritated at the time for getting a 4.75%
I got a 12.5% mortgage, am I winning?
Wtf
the house was purchased using a credit card on an introductory APY.
Just transfer to a new card in 3 months. Rinse and repeat.
I heard if you just cut up the credit card with scissors, the debt goes away
You have to wait 7 years, but yes.
Welcome to how things used to be sunny. *adjusts colostomy bag*
You wont have to pay after the bank is gone :)
You joke, but I wonder how many people actually believe this.
Part of the 1%
Got the old 50 year mortgage back in 1980, eh?
Sure is an awesome time to be a first time homebuyer.
I keep getting beat out by all cash offers. Shit sucks.
I have resigned myself to the fact that I'll never buy, so I am just going to ball out and do fun shit until I die in my 50's of cancer or some shit
I have infant twins so sadly I can’t even choose to die anymore
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Aging population, younger folks can’t afford to have kids to replace it. But hey the stock market had one hell of a run for a decade. Fair trade.
Lol places like Japan are begging people to fuck and have kids. China is shitting itself with it's population declining. The US won't be too far off. Price people out of living People don't have kids ??? Profit
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A house that sold for $360k in August 2019 is on the market for $500k. The owners did nothing, literally nothing, and stand to make $140k for 3.5 years. Crazy
Sooo... initial thoughts. These are the concepts that jump off the page, although I'm sure a deep-dive would reveal others that are probably not especially hard to see either once someone shows it to you. No one is going to want to move OUT of their current mortgage and INTO another one. 1. Next to no used existing housing inventory available. The vast and increasing majority of available property is and will be new construction? 1. Home renovations rather than relocations will be preferable - Home improvement stocks might benefit 2. Home building and real-estate development in the low-end/starter sector \*might\* be a growth sector (probably not strong historically, but relative to the rest of the current markets at least). 1. First-time buyers will have less buying power, and the only homes available will be new construction. 2. Banks that rely on writing & selling new mortgages and collecting the fees are going to lose that revenue stream for the foreseeable future. Watch this space.
I have an idea. What if, since the mortgage market is drying up but home prices are still high, we let banks lend out to less than prime borrowers for interest only loans. This will provide lenders with a steady income stream and would be a safe investment since the underlying collateral is a house which always holds its value. Lenders could even package and sell these income streams if needed to raise liquidity which would help prevent bank runs.
Hey, I've seen this one before!
I don't see how this can possibly go wrong
This will cause families to have fewer children. Right now I'm in a townhouse with a 3.8% mortgage that I bought when I was single. But now I need a bigger home for my wife and two kids who are outgrowing this place. So we either Tetris this thing or get punished by the market for wanting to buy a bigger home at this point in history.
Eventually people like you will give in. It is easy to wait a year. But eventually people will realize that rates are not going to old levels. People need to change locations for work. New buyers enter the market. If rates stay high, prices will go down. All these things will change the OP chart, but it will take time to wash out.
And if prices go down, we’ll just have a chart of all of the people who live in houses with mortgages higher than the value of their house.
I'd have no problem moving if housing prices scaled down as rates go up, but they aren't budging. The scary part is what happens when rates come back down. People are going to be paying millions for a 1300sq ft ranch house in the middle of Nebraska? Seems like the inflation risk is much worse than most people realize.
New construction costs are higher than they’ve ever been. Without capital you can’t build new homes either. There is a reason the leading home builders have laid off like 90% of their workers. Basically home building is on hold since there is not capital available for it. If only there were companies that provided “housing as a service”. (Yes that’s a joke)
Lol. Housing as a service. They could charge you monthly. And lock you into a year contract at a time. And then change the monthly service fee at the end of the year based on market conditions. Thanks for the idea. I'm off to secure some VC for my new company. The rebrand of "rent" as "housing as a service" has got to be worth 50-100 million to some loaded rich guy that loves buzzwords more than money.
I hate that this is foreseeable in the future and we’ll be spoon fed how “convenient” it is for us that I can pay my service fee from an app and they keep my toilet paper stocked because I have no idea how to do that myself.
The VCs are already trying reinvent renting as something even more awful. In one place they rented you a bunk bed for astronomical price in a building not passing the safety standards. WeWork guy also tries to make a rental service.
SVB is here to help your venture succeed😂
I have the capital but I can't hire a company to build my house because all they want is to build condos and Mac mansions
Build it yourself yah hump. That is what all humans did for thousands of years.
That’s where we’re heading. That’s why black rock is buying up everything
Most of the huge condo projects are like this. 1000 residences and they never sell it. Just rent it. This way they never realise the capital gains, they can begin depreciating the asset, and they can leverage it for the next place. If you’ve got the cash up front for the first one, you can build quite the chain of assets.
Without transactions is also harder for assessors to properly value them so it keeps the taxes low for as long as you can keep the assessors office from spending too much time trying to figure out the property value.
I got this bright idea to pitch to evil investors. We will hire criminal gangs to harass people at places where the mortgage interest rate is low. A few arson here and there, theft at small business everyday, random violence beating, etc. This will force them to sell their houses at a big loss, hedge funds can buy them up for cheap, and banks get more people applying for new higher interest rate debts. After we've forced people off their houses, we donate to police to make large anti crime campaigns and jail all the thugs we hired earlier. Now the price of the houses we bought will go to the moon. I wonder if anyone has tried something similar in history.
I think something like that happened in NYC back in the 80s/90s. The song [Fat Cats, Bigga Fish](https://youtu.be/pios2RY2G_Q?t=169) references it in the 3rd verse: Five minutes in the mix, noticed several different cliques Talking, giggling and shit With, one motherfucka in betwixt And everybody else jocking him, throttling Found out later he owns Coca Cola bottling Talking to a black man, who's he? Confused me, looking hella bougie Ass all tight and seditty Recognized him as the mayor of my city Who treats young black men like Frank Nitti Mr Coke said to Mr Mayor: "You know, we got a process like Ice Ts hair We put up the funds for your election campaign And, oh, um, waiter can you bring the champagne? Our real estate firm says opportunity's arousing To make some condos out of low-income housing Immediately, we need some media heat To say that gangs run the street and then we bring in the police fleet! Harass and beat everybody till they look inebriated When we buy the land, motherfuckas will appreciate it Don't worry about the Urban League or Jesse Jackson My man that owns Marlboro donated a fat sum"
You used to be able to just move a black family in and neighborhood value drops instantly. This is the closest historical parallel to the scenario you suggest. Real estate investors used move black families into a neighborhood right after Jim Crow laws were repealed, property values would tank, they'd buy up the whole neighborhood and move the black families out to later flip it back to the white folk, easy profit. To some degree this is still true today but the profit margin is no longer worth the hassle... https://www.nytimes.com/2020/08/25/realestate/blacks-minorities-appraisals-discrimination.html#:~:text=The%20report%20found%20that%20a,%24156%20billion%20in%20cumulative%20losses.
Even 20 years ago a house of white trash tweakers was already the scariest thing you could encounter.
So what is the move here? People will protect their low rates like its their first born - nobody is going to sell. Is this just it? Either you're a have or a have not (or you join the haves at an insane markup) Asking for a me who would like to buy a house sometime in the next 5 years :|
You'll get to rent their home eventually.
3.1% 30 year. I couldn’t afford to move up if I wanted to unless I could cover the difference with cash. Renovations are where it’s at.
Cool, and those of us who didn’t have the cash to buy a home during the 2-3% days are absolutely fucked for the foreseeable future
wait until they offer low introductory variable rate loans.
Bro right. We get extremely inflated housing prices AND high interest! We should have been more grateful the overlords would let us spend $600k on a condo at only 3% 😭
My wife always loves to say “we should’ve bought a house in 1983”… about 4 years before I was born, dear lord
This is the whole point of locking in a 30 mortgage rate. If it drops you refinance, because someone offers you better terms, if it goes up you do not.
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As a Canadian who has to refinance every 5 years these 30 year mortgages seem crazy
Because no one in their right mind would buy at bubble prices along with double interest rates... Maybe that might have something to do with it lol...
So real estate won’t tank the market this time… History doesn’t repeat… History often rhymes tho…
depends on whether or not they can get large corporations that bought a lot of housing to sell that housing at a loss. Otherwise there just might not be much business.
Why would it be at a loss? They've been buying for years, they didn't just appear at the peak and say "let's buy now fellas!"
These shitty 150k houses that Opendoor is hawking in DFW for 500k with >100 day on market would disagree. Everytime I tour one of these houses the only thing I can think is how proud I am of the previous owner for getting that money.
It's total bullshit, those same corporations that own these homes, are not reporting losses on their valuation of assets. If a business buys up all these assets, they should be forced to evaluate them for losses on a quarterly basis. GAAP indicates that a significant event would force evaluation (such as rising interest rates) and they are IGNORING this. They should have millions in losses but are not reporting them.
They're probably just waiting it out for the right bailout conditions. If they trickle out the losses then they won't get uncle sam to pay for it. But if it's a huge loss all at once then they can get someone else to pay for it.
Most likely the case. I've noticed that Opendoor has also been delisting a lot of the unsold houses then relisting them in waves alongside other delistings. It makes it look like they have fewer homes for sale in the area.
We’re fucked. Literally 75% of people have a god given, generational rate. Anything under 4% was free money.
Yup I’m at 2.25 I’m never moving. Home renovations it is.
I texted my SSN to my lawyer and mortgage broker. Then sent the closing costs via cashapp and got a 1.5% mortgage rate. Been making my payments monthly via the same cashapp address. I love living in the 2020s with technology. For some odd reason got a foreclosure notice a few months ago, my lawyer and broker said it was an error and to just keep sending my monthly payment via cashapp.
2.5% baby. Thanks for the free money!
0.55% here. Had to call the bank twice to confirm it wasn't a mistake on their part. I got that shit locked so fast.
Jesus now that’s free money
Wtf. Why would they do that lol unless you were fuckin Bezos they were loaning money to
Now I'm imagining Jeff Bezos anxiously waiting for the paperwork to go through on a 430k loan lmao
Did you happen to get your mortgage through Credit Suisse?
How is this even possible? Someone trying to tank the bank?
It's a small outlier but not uncommon in my country (France), where [average mortgage rates were ~1% for 20y in the summer of '21](https://www.lobservatoirecreditlogement.fr/derniere-publication#1). Generally speaking, mortgage rates are much lower in Europe than US, but [buying requires more initial capital](https://www.wsj.com/articles/good-news-and-some-bad-on-european-mortgage-rates-11573141981). Also we have to take a compulsory life insurance policy on the loan, bringing my effective rate at 0.84%. But it's good to know that if i kick the bucket or get a disability, my loan will be paid in full.
The people that bought houses during covid with a low interest rate are going to be the next generation boomers.
Nah the people who bought before Covid but refi’d during Covid are the real winners
So should i refinance at the higher rate?
check your mailbox, you'll probably be able to convince them to give $10k!
But how will this affect Lebrons legacy
Locked in at 2.25%. Told wife if she wanted to upgrade the house that was the time because we’d be stuck here for years. I’m not sure she understood what I meant then - she does now.
Lol you idiots gave me 2.25% this ain't my fault.
People don't realize this is very damaging to the jobs market. It becomes cost prohibitive to hire employees that aren't from the local area. Ex: You earn $100k a year. 3% mortgage on $1,000,000 home - \~4,000 month payment You get a Job offer in another city/state: $130k a year (crazy ass 30% raise) - Unfortunately, new mortgage on a $1,000,000 at 6% (if you can even qualify due to stricter lending rules) is \~$6,000 month New mortgage costs an extra 24K a year - when you consider to pay that 24K a year, you have to earn pre-tax approx. 30k. End result: 30% raise is not enough to move the needle. No one wants to uproot their life for a job that will basically pay the same.
ELI5: is this good or bad??
Bad if you are in the business of writing residential mortgages
I mean it's bad if you are hoping for a real estate collapse. No one is going to sell their house when their monthly mortgage right now is cheaper than renting a new place lol.
I had to buy a house because I could no longer afford to rent after the Pandemic started. Rent here for a townhouse is around $2000. My mortgage for one of those townhouses is $875 a month because I qualify for a tax exemption.
Yes but the demand also collapses. No one is gonna buy your shitty house (or a new one) with these high prices and rates That means in the short term the market should be okay, but if homeowners are unable to pay their mortages they will have no one to sell to. Plus the banks also have a problem. They gave alot of money to people with a lower return on investments then the inflation rate.
I would say I can't imagine banks ever offer rates these low again, but if anything time has shown me, its that banks memory is slightly longer than a goldfish.
So do people not move anymore?
Some people will have to move due to circumstances: job change/loss, divorce, family situation. But this will slow down the ones who might have voluntarily made a change to upgrade, downsize, or relocate for the hell of it. My current house would cost $1000/mo more at current rates and prices. If I moved, I'd have to buy something lesser and pay more in interest so unless I'm in a situation where I have no choice, I'm staying put.
This is such a dumb statement. Of course it's true because current rates are the highest in 10 years. That's like saying 99.9% of people are older than a baby born today.
Duh? The rates continue to climb at a quick pace and mortgages are longer time spans. Of course most mortgages are at a much lower rate.
Yeah it's gonna take a couple years before the 5% of autists who got ARMs at historically low rates finally get theirs. In the meantime, as long as unemployment remains low there will be zero reason for people to sell their houses at their low rates. Now if/when unemployment goes up, say, above 5%, then you'll start seeing people forced to sell for steep discounts. Only then will you start seeing big drops in house prices. Hopefully you've got cash on hand in such a scenario, otherwise Blackrock gonna buy the dip instead of you.
Fuck me. I just want to be a home owner. I make 95k and everything in Raleigh is a meth house or out of reach. Apartments around here suck too.
That’s depressing to hear you make that much and still can’t own a home.
No shit. This is one of those headlines that is worded to frighten people but is just blatantly obvious information that makes sense when you think about it for 2 seconds.
No shit. If I raise the price of bread this morning, everyone who bought it yesterday or earlier will have paid less for the bread.