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Tuesday, September 27, 2022

Mortgage rates soared to their highest level since October 2008. Meanwhile, his FHFA House Price Index and the S&P CoreLogic Case-Shiller House Price Index released on Tuesday could confirm that house prices remain near record highs.

This dynamic has caused mortgage costs on newly purchased homes to explode, crowding out many prospective buyers and cooling the housing market. For example, the average monthly mortgage payment in the Boise metropolitan area is $2,592, up 139% from the pandemic low of $1,084.

These extremes must remind some of the housing boom and bust of the mid-2000s that triggered the global financial crisis.

But at the time, there was an almost universal optimism about housing prices, giving way to disproportionately lax lending practices and risky financial innovations, creating a far more fragile mortgage market than many pundits thought. I got

Things are very different today.

First, lenders have been far more disciplined in their lending practices. According to New York Fed data, the majority of new mortgages in recent years have gone to prime borrowers with the best credit scores.

Image credit: Sam Ro

Image credit: Sam Ro

Second, variable rate mortgages are nowhere popular Just like in the housing bubble. This means that few new buyers are vulnerable to interest rate fluctuations.

Image credit: Sam Ro

Image credit: Sam Ro

Third, and this is related to the chart above, analysts at Goldman Sachs say about 99% of outstanding mortgages have fixed rates that are lower than current market rates. In other words, the majority of homeowners have been virtually unaffected by rising mortgage rates.

Image credit: Sam Ro

Image credit: Sam Ro

With the Federal Reserve increasingly tightening monetary policy, mortgage rates will remain high and housing market activity may continue to cool.

However, it is unlikely that the housing market crash will be repeated.

Today’s newsletter Sam Lawthe author of TKer.coFollow him on Twitter. @ Samuro.

what to see today

economic calendar

  • 8:30 AM EST: durable goods orderAugust preliminary report (forecast -0.3%, previous month -0.1%)

  • 8:30 AM EST: Durable Goods Excluding TransportPreliminary August (forecast 0.2%, previous month 0.2%)

  • 8:30 AM EST: Non-defense Capital Goods Orders Excluding AircraftPreliminary August (forecast 0.2%, previous month 0.3%)

  • 8:30 AM EST: Shipments of non-defense capital goods, excluding aircraftAugust preliminary report (forecast 0.3%, previous month 0.5%)

  • 9:00 AM EST: FHFA House Price IndexJuly (forecast 0.0%, previous month 0.1%)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller 20-City Compositem/m, Jul (0.20% forecast, 0.44% m/m)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller 20-City Compositee, YoY, July (17.10% forecast, 18.65% previous month)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller U.S. National Home Price Index (17.96% of previous month)

  • 10:00 AM EST: Conference Board Consumer ConfidenceSeptember (104.5 forecast, 103.2 last month)

  • 10:00 AM EST: Current State of Conference BoardsSeptember (previous month was 145.4)

  • 10:00 AM EST: Conference committee expectationsSeptember (previous month 75.1)

  • 10:00 AM EST: Richmond Fed Manufacturing IndexSeptember (-10 forecast, -8 last month)

  • 10:00 AM EST: new home salesAugust (forecast 500,000, last month 500,000)

  • 10:00 AM EST: new home salesm/m, Aug (-2.2% forecast, -12.6% m/m)


  • Blackberry (BB), Carmain Foods (calm down), cracker barrel (CBRL), Jabiru (JBL)

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