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Are we seeing a mortgage rate lockdown?

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The premise of the mortgage rate lockdown is simple. mortgage interest rate When interest rates rise, some people have their housing inventory locked up and stuck.There’s never been a time when mortgage rates went up, so this is something I never believed so soon It then held high for a long period of time. But now this is a real risk.

There is usually a natural number of new listings each year. Inventory increases from spring to summer, and decreases from autumn to winter. We are approaching a time when total inventory traditionally declines.


But with mortgage rates dropping recently, we’re entering a tricky time in home economics where this premise has to be taken more seriously. 2.5% 2021 onwards 6.25% 2022.

It wasn’t interest rate movements that caught my attention, but new listing data.

All because mortgage interest rates 5.25% to 6.25% This year, I saw how home sellers reacted to the move. 6.25% New listing data stopped at first. (This is the exact opposite of panic selling, by the way.)

Screenshot-2022-09-12-at-12.55.54-PM

But what also caught my eye was that mortgage rates were 1.25% Go down and click New listing data still fellThe fact that this data line dropped and sharpened earlier this year made me think this could be something of a lockdown on mortgage rates.

from redfin:

However, what happens when rates spike can also be temporary and we are in seasonal timeframes with new listings and soon total inventory data decreasing. I’ll keep an eye out for new listing data for the rest of the month ahead.

What I don’t want to see in 2023 is that if mortgage rates remain high, the year starts off with a negative year-over-year decline in the list. A seriously unhealthy housing market List; these regions are seeing effective pricing as demand weakens. However, inventories in the rest of the world have not grown much.

My concern is that if mortgage rates fall in the future, the inventory growth we saw in 2022 could stall, pause, or even reverse. Traditionally, since 2012, inventory growth has occurred in years of weak demand from mortgage buyers. It’s 2014. These are the only years in which purchase requisition data show negative mortgage demand growth. Adjusted for population, 2014 was the lowest level of the index to date, and 2022 saw a notable hit for the index, falling below 2008 levels.

As you can see, requisitions are below 2008 levels, but total inventories are nowhere near their post-2007 peak levels. 4 million list, currently we have 1,310,000.

Now, one thing that may have happened this year to push new listings data down more aggressively is that housing isn’t affordable. I haven’t had to deal with a 6% mortgage rate for a long time. Since 2020, home prices have increased significantly and will continue nationwide in 2022.

Case-Shiller Home Price Index

This is why 2023 is key to the mortgage rate lockdown issue. U.S. inventories need to return to his 2019 levels, and that will only happen if new listings data are positive year-over-year heading into spring 2023. — Levels close to or above 2019 levels. The whole country just needs to get back there to remove the label of a barbarically unhealthy housing market.

Can you blame the home seller?

One thing people forget about low mortgage rates is that people are spending more time at home. The epic wave of refinancing seen in 2020 and 2021 has improved homeowners’ cash flow far more than people thought.

MBA refinancing index

Wage growth is picking up in America. One of the best hedges against inflation is a fixed rate mortgage. As wages rise, cash flow looks good compared to shelter payments. Renters don’t have this luxury, but homeowners do.

Atlanta wage growth data

  • Overall unweighted wage growth was 6.7%
  • Full-time wage growth is typically 6.6%
  • College graduate 6.0%


So the reason some households were reluctant to pull the trigger when rates soared toward 6.25% and even 5% to 6% mortgage rates on top of the big rise in house prices was a big reason to go public. I can understand why you were hesitant. Homeowners have excellent cash flow and rarely find themselves financially difficult unless there is good reason to do so.

I’ve been skeptical of the mortgage rate lockdown assumption for years, but that’s only because interest rates haven’t been kept high enough to truly test that assumption. A return to 4% should kick in some sellers, but at 6% it makes sense why some sellers aren’t pulling the trigger.

Always remember that traditional sellers are almost always home buyers as well. I would like to be satisfied with the interest rate.

Even I, who has never believed in the lockdown mortgage rate premise, must admit that we are historically in a unique background and can finally put this premise to the test.

Mortgage rates, which have fallen since 1981, 2.5%and many Americans rate 2.5%-4%Interest rate spikes are similar to those seen in the 1990s, but as you can see below, there was room for interest rates to fall significantly back then.

The surge in mortgage rates alone may have caught traditional sellers off guard. This is a problem when the mortgage market is not working. Because buying or selling a home is the biggest financial decision you’ll ever make. Keep this in mind when looking at housing data for 2022.

With each new housing cycle since 1980, mortgage rates have been 2% lower than they were during the last economic expansion, supporting demand.Recent home loan interest rate lows 2.5%-3.5%for this to occur in the recovery phase of the next cycle, mortgage interest rates must rise to 0.5%-1.5%That seems highly unlikely.However, mortgage interest rates Four% Much easier to imagine.

The question for me is what will happen next year.

Part of my position that housing needs more balance is based on total inventory levels returning to 2019 levels 1.52 million to 1.93 millionWhen we say this could happen in 2023, it’s based on traditional annual listings, where demand is weak and allows inventories to build up over time.

We still get new listings every year so I still believe in this premise. , raised the possibility of a lockdown on mortgage rates in the future if mortgage rates remain higher than normal.

Another issue that could delay listings until rates drop is that this could hamper the recent build-up of inventories we’ve seen here in the US. Sellers wait for the rate to drop, and when it does, demand improves. This could slow, pause or even reverse the inventory growth seen in 2022. Total inventory levels going down again is not what I want (nor is the Federal Reserve wanting it).

If the premise of lockdowns on mortgage rates is true, the housing picture could get complicated.

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