This BREAKING NEWS Article Is About Mortgage Rates Skyrocket To Highest Level Since 2020
The housing market has been booming throughout 2020 and was expected to continue well into 2022. However, the surging yields on the U.S. Treasury Bonds have skyrocketed mortgage rates in recent days and weeks. Housing values have literally gone through the roof. There is more demand than the inventory of housing. The coronavirus pandemic has added fuel to the fire on a hot housing market. This is mainly because many businesses and companies have turned to remote job positions in their workforce.
Changes In Remote Jobs Pushes Demand Of Homeownership: Mortgage Rates Skyrocket
Remote wage earners can live anywhere. Remote workers and not restrained to a residency/distance requirement. The recent riots from radical left-wing groups like Black Lives Matter and other Democrat-led groups have triggered many apartment renters in the city to move out to the suburbs and/or other low-taxed states. Many liberal states like Illinois, New York, and California are experiencing a flood of out-migration of not just their citizens but businesses due to incompetent radical mayors and governors. Countless businesses in Illinois have been forced into bankruptcy or permanent shutdowns due to JB Pritzker’s long stay-at-home order and liberal far-left policies. In this article, we will discuss and cover how Mortgage Rates Skyrocket To Highest Level Since November 2020.
Mortgage Rates Skyrocket Can Mean Housing Correction
Mortgage rates have increased sharply without any warning in a big way these past couple of weeks.
The latest data released from mortgage giant Freddie Mac, the 30-year fixed-rate average jumped to 2.81 percent with an average 0.7 point increase from the previous week of 2.75 percent. Mortgage rates were at 3.49% percent 12 months ago. This is the highest rate the market has seen since November 12th, 2020.
Dale Elenteny of Gustan Cho Associates said the following:
Published rates by Freddie Mac and/or Fannie Mae are par mortgage rates for prime borrowers. U.S. Treasuries have been inching higher with rates holds stable in the past several weeks. Then mortgage rates burst to the highest levels since November 12th, 2020. The sudden spike in yields on treasuries was due to the Biden Administration’s $1.9 trillion stimulus package which less than 10% of the funds were earmarked for coronavirus aid and the balance was a wishlist for Democrats spending spree. This worries investors about inflation and an economic downturn.
The Future Of The U.S. Economy
There is a lot of fear of the Biden Administration’s economic plans and fear of inflation. Mortgage rates have skyrocketed by almost 0.75% percent in recent days due to both mortgage-backed securities and U.S. Treasuries sold off on inflation concerns. Many analysts and economists feel the market is overreacting while others see pending economic disasters waiting to happen. Fear of inflation is a negative for the bond market due to the devaluation of bond yields. Inflation fears can trigger the Central Bank to increase the current zero percent interest rate. The good news is that mortgage rates still remain at near historic lows. However, even with low rates, refinance mortgage loan applications fell sharply due to the sudden spike in rates.
What This Means For The Housing Market
The housing market has been out of control for the past 7 years. This holds true with mortgage rates all over the map. There is still more demand for housing than the inventory of homes. Despite the sudden spike in mortgage rates, demand for housing is still expected to remain strong. Both HUD and the Federal Housing Agency (FHFA) have been increasing FHA and Conforming Loan Limits for the past 5 years. the 2021 FHA loan limit has increased to $356,362. 2021 conforming loan limit is now capped at $548,250. Both HUD and the FHFA have been steadily increasing FHA and Conventional loan limits for the past five years due to homebuyers being priced out of the housing market. The bottom line is mortgage rates are still at near historic lows. The sharp sudden uptick in mortgage rates recently still has not increased rates than what rates were over a year ago. The ever-increasing home prices year after year seem to be a concern due to having many would-be homebuyers being priced out of buying a home. Many homes in lower-taxed states are selling over 10% list price. Many homebuyers are hoping for a housing correction. However, from the numbers we see on-demand for homes, we do not anticipate a substantial housing market correction in the near future.
