“Recent stock market volatility” has several responsibilities.
To Wolfrichter for Wolf Street..
Fragments of evidence are lined up in increasing density. The number of potential future homebuyers who need a mortgage has been thinned for months. Another milestone today: Mortgage applications to buy a home are down 12% from the previous week and down 15% from a year ago.
In that report, the Mortgage Bankers Association added today that “future homebuyers have been postponed due to higher interest rates and worsening affordable conditions.” A ridiculous surge in home prices over the last 18 monthsIn addition to the surge over the past few years, mortgage rates have returned to very low rates decades ago.
The MBA’s Purchase Mortgage Applications Index has fallen to lows in late 2018. At that time, the FRB was raising mortgage rates, but QT pushed mortgage rates to over 5%, trading volumes were exhausted, and prices began to fluctuate. It was down in some markets. However, inflation fell short of the Fed’s target and Trump sentenced Powell to the Navy every day. Powell built a cave, mortgage rates fell again, and volumes and prices rose again. Raging inflation is now a major economic concern and the Fed is determined to put it under control (data from Investing.com).
Holy Molly Mortgage Rate.
According to today’s MBA, balances matched, down 20% this week, with an average 30-year fixed mortgage rate easing slightly from 5.53% last week to 5.49%. This is the highest Holy Molly Mortgage Rate since 2009 (via Data Investing.com):
The bark of the stock is blamed.
And it’s not just mortgage rates. The MBA added, “General uncertainties about the short-term economic outlook and recent stock market volatility can delay home searches for some households.”
In this context, “volatility” always means a fall in stock prices. Because no one complains about upward volatility, stocks are skyrocketing. So, not every day, there were some sharp bear market backlashes, but they didn’t last long, after which stocks fell to lows. It is anxious for those who have come to expect eternal simple wealth from stocks and have built the whole future on this theory.
If you plan to take a margin loan and down payment on a stock that is skyrocketing, you may now have to rethink. That’s for sure. So take a look at the sh * tshow taking place today. Currently, Nasdaq is down 4% and is subject to change.
Cryptography wasn’t mentioned in the MBA, but it’s good because it’s just a gambling token. But some larger ciphers have already collapsed to essentially zero. Others are on the way. Bitcoin has plummeted about 58% since November, down 25% from a year ago.
And it doesn’t stimulate confidence for those who were hoping to buy a home with their crypto gambling wins. Those who came out early made it. And those who believe in HODL (“protecting the lives of loved ones”) will, well, need to continue to believe.
Refi application has collapsed for several months..
Mortgage applications for refinancing existing mortgages have fallen further, plummeting in the proportion of these holy mortgages all year round, and the MBA refinancing mortgage application index has reached its lowest point since the end of 2018. bottom.
Cash-out Refi and no cash-out Refi..
But between cash-out refi, where poor homeowners are still feeding in the valley of soaring home prices, and no cash-out refis, where homeowners are trying to lower their monthly payments by getting a new mortgage. There is a split at a lower rate.
The AEI Housing Center Track this split using a different method than the MBA to explain your mortgage application.
Cash out refis Motivated by the need to withdraw most of the cash from the home, mortgage rates are a secondary issue. As a result, cash-out refis continues, but fell 42% year-on-year, reaching its lowest level in early 2019, according to AEI Housing Centers.
FHA-guaranteed cash-out mortgage shares (including sub-prime mortgages and low-capital mortgages) rose from 10% at the beginning of the year to 27% of all cash-out mortgages.
“This shows that high-risk borrowers are experiencing more stress from inflation, which is not a healthy trend,” AEI said. Do they refis cash out at holy mortgage rates to pay inflation? Ah … Thank God that taxpayers are not the only banks, they are here from the beginning. So the Fed can break this.
No cash out refis Motivated by lowering mortgage rates to reduce mortgage payments and save money each month. And those lower mortgage rates are now history. In the current reporting week, cash-out refis has not collapsed by 93% year-on-year.
This means the end of monthly savings due to reduced mortgage payments, and the end of these savings being spent on goods and services, thereby providing another pillar of support under personal consumption. Was kicked out of.
Want to read and enjoy WOLF STREET and support it? Use ad blockers-I totally understand why-but do you want to support your site? You can donate. I am extremely grateful. Click on a mug of beer and iced tea to see how to:
Will I be notified by email when WOLF STREET publishes a new article? Sign up here..