Mortgage Rates are surging across America’s Housing Market. This will cause a wave of Foreclosures to hit the US Real Estate Market in 2022. And could result in a massive HOUSING CRASH.
The 30-Year Fixed Mortgage Rate just hit 5%. And some home buyers are even getting quoted over 6%. That means the annual mortgage cost for new home buyers is now over $22,000.
This is 35% higher than the previous peak in the 2007 Housing Bubble. The result is that Debt to Income Ratios for new homebuyers are now hitting 40%.
These sky-high Debt to Income Ratios indicate that Banks are starting to make bad and risky loans in the 2022 Housing Market. Similar to what they did in the mid-2000s. Back then a devastating wave of Foreclosures and Short Sales hit the US Housing Market.
A similar situation could play out over the next several years as Home Buyer wages and incomes have failed to keep pace with the rate of appreciation and the surge in Mortgage Rates. The result could be one of two things:
1) Banks stop making loans/mortgages all together because so few new homebuyers qualify.
2) Banks make even riskier mortgages going forward and a repeat of the 2008 Financial Crisis / Housing Crash plays out.
Both situations would be bad for the Housing Market and result in Home Price Declines.
FHFA Mortgage Data (New Residential Mortgage Stats Monthly): https://www.fhfa.gov/DataTools/Downloads/Pages/National-Mortgage-Database-Aggregate-Data.aspx
Long-Term Mortgage Rates:
https://fred.stlouisfed.org/series/MORTGAGE30US
Mortgage News Daily:
https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed
Case Shiller Home Price Index:
https://fred.stlouisfed.org/series/CSUSHPINSA
Zillow Home Values:
https://www.zillow.com/research/data/
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Originally published at https://www.youtube.com/watch?v=kSMHcHqLZSc
