The following report is from the Trends Journal:
During the week ending 5 May, U.S. mortgage interest rates for a 30-year, fixed-rate loan averaged 5.27 percent, moving up from 5.10 percent the week before, according to the Federal Home Loan Mortgage Corporation (Freddie Mac).
The rate was the highest since 2009. A year ago, rates averaged 2.97 percent and rose to 3.22 percent in January this year.
The spike is the fastest increase in mortgage rates “in decades,” CNN said.
While housing affordability and inflationary pressures pose challenges for potential buyers, house price growth will continue but is expected to decelerate in coming months.
Freddie Mac chief economist Sam Khater said in a statement announcing the rate rise
The climb in home prices is expected to ease, in part, because the U.S. Federal Reserve will continue to raise interest rates through the year, including a projected half-point bump in June and again in July.
Mortgage interest rates are closely tied to yields on the ten-year treasury note.
The financial conditions facing home shoppers have shifted in a big way.
Danielle Hale, Realtor.com’s chief economist, said in a public statement after the Fed raised rates by a half-point last week.
The cost of a mortgage has increased by about 50 percent from a year ago, she said,
A surge which has caused many shoppers to rethink budgets and likely knocked some households out of the home purchase market for now.
Mortgage rates probably will pause at this level for some time, Michael Fratantoni, the Mortgage Bankers Association’s chief economist, told The Wall Street Journal, but the market for refinancing loans is unlikely to rebound any time soon.
TRENDPOST: The desire to own a house will remain strong, but the number of people able to afford to buy a home will continue to diminish.
The number of new houses being built will be limited by shortages of materials and a lack of available land, as we reported in “Housing Market: Sales Up, Fewer Homes for Sale” (22 Feb 2022).
In addition, those materials are dramatically more expensive than they were before the COVID War, which we documented in “Lumber Prices Add $36,000 to Cost of New Home” (4 May 2021).
Millennials are entering prime home-buying years, so competition for existing homes also will increase sharply, in part because fewer people will be able to afford to leave one dwelling and buy a new one of comparable quality.
Also, as interest rates climb along with the cost of living, the pool of qualified buyers will shrink.
By the end of the year, the Fed will have boosted interest rates to at least 2 percent and probably higher.
We maintain our forecast that when the Fed boosts the fed funds interest rate to or above 1.5 percent, the housing prices will soften and foreclosures will escalate. Minus a wild card event, such as the explosion of WWIII or war in the Middle East that will spike oil prices, etc., while we do forecast a housing slump, we do not forecast a housing market crash.
Further Insights
Financial advisor and investor Neil McCoy Ward, who has also collaborated with Gerald Celente and the Trends Journal, produced a short update on the housing market and rising mortgage rates a month ago. As shown in that video, and further reiterated by this latest piece from the Trends Journal, the housing market is nearing a meltdown. At the time of filming, McCoy-Ward forecasted that the newest federal inflation rate would be 8.5%, which was a perfect estimate. The video is worth the watch.
AUTHOR COMMENTARY
[26] Be not thou one of them that strike hands, or of them that are sureties for debts. [27] If thou hast nothing to pay, why should he take away thy bed from under thee?Proverbs 22:26-27
The housing market is facing a definite collapse coming up, as noted in this report and insights from McCoy-Ward; so be advised and be alert to this coming tsunami wave.
As I recently noted, the real economy will continue implode while the stock market still remains sustained. It will be volatile at times, yes, but it will still remain elevated and propped up.
The Federal Reserve Is Guaranteeing Inflation Will Persist: Ignore The Media’s Rhetoric
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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An interesting news clip on reasons why wealthy Americans are seeking second passports https://youtu.be/VnuMAF0SaL0