Home News That Was Fast: 30-Year Fixed Mortgage Rate Spikes to 6.18%, 10-Year Treasury Yield to 3.43%. Home Sellers Face New Reality

That Was Fast: 30-Year Fixed Mortgage Rate Spikes to 6.18%, 10-Year Treasury Yield to 3.43%. Home Sellers Face New Reality

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To Wolfrichter For Wolf Street..

According to the Daily Index, today’s average 30-year fixed mortgage rates soared from 5.85% on Friday to 6.18%. Mortgage News Daily.. Aside from the magnitude of the surge, this was also the highest mortgage rate since daily data collection began in April 2009. This is very fast and the mortgage rate has almost doubled since the beginning of the year (graph by Mortgage News Daily):

Mortgage yields follow a 10-year Treasury yield, but there are spreads between them, and spreads vary. The Treasury yield for 10 years soared 28 basis points today, reaching 3.43% at the closing price, a big move, the highest since April 2011.

Wait a second…

At that time, 6% mortgages were considered low before quantitative easing and interest rate restraints. In other words, it was very low, and I thought that the mortgage for 15 years in 1989 was quite good at 8%. There are people here who remember the 15% mortgage rate. Until 2002, 30-year mortgages weren’t seen at 6%.

Freddie Mac’s data dates back to the early 1970s (although the June 9 release is about a week behind today’s daily measurements). This shows how fast mortgage rates have bounced off record lows, and how low they are still.

Let’s take a look. Greenspan Fed came up with the idea of ​​lowering interest rates following the collapse of dotcom and creating a housing bubble to take over from the collapsed stock market bubble. This worked and we got a housing bubble. The federal government responded by raising interest rates to more than 5% again. This worked, the housing bubble burst and the mortgage crisis was triggered. -Leveraged banks, the Fed has rolled out a new dual weapon QE and 0% interest rate policy, which works, boosts all asset prices, bail out bank bondholders and shareholders, and soon next The housing bubble that triggered it, but it’s far more spectacular than anything else.

You know the drill But this time, there is something new. Furious consumer price inflation that hasn’t been seen for 40 years, And all bets are off. Furious inflation has caused a lot of long-term damage to the economy, currencies, businesses, and people, and it’s time to crack down on it.

Well, it’s not really a crackdown, it slowly raises the short-term policy rate from near 0% to a still very low level, finally ending QE and slowly starting QT.

So it’s not really a crackdown, but if you look at how big the market has responded to this little little policy action, it’s thanks to 12 years of quantitative easing and interest rate restraints (12 years of Fed policy error). So you can see how over-inflated all the assets. It is to bring all this madness back to some degree of normality. However, inflation is now intensifying and all bets on federal puts have been invalidated.

After 12 years of money printing and interest rate restraints, home prices soared, and rising mortgage rates had a very different impact.

Whenever mortgage rates rise slightly at current prices, they remove a new layer of potential buyers from the market. And trading volumes are declining, homes are starting to hit the market, and inventories are piled up. So, they say it doesn’t happen here, but it’s already happening in May, before the current mortgage rate surge. Inventory surges amid price cuts and slumping salesThere is one way for the seller to close the deal, so the price will be reduced enough to the point where the next buyer can buy the mortgage.

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