Mortgages & Inflation - 3 Charts
In 2022, mortgage rates were near 3%.?Now, they’re over 7%.
This is the highest rates have been since the year 2000, but they were over twice that high before:
The refinance business was great for most of 27 years (1984 - 2021).??
Inflation
The blue line is inflation from 1966 – 1982
The orange line is inflation from 2013 – now
Will the orange line continue to closely track the blue line??Will inflation follow a similar path and go back up again??
An exercise in abstract thinking...
The median home price in Orange County, CA this summer is $1,025,00 on an average home size of 2,000 sf.
If someone bought that average house, with a 10% down payment, and a 1981 mortgage rate, their mortgage payment would be $15,538 per month.
(PITI: mortgage of 922,250 @ 18.45% + property taxes @1.3% + home insurance estimate $200/mo).
John Mauldin, author, analyst, financial writer, frequently says, "If something can't happen, it won't."
History doesn’t repeat but it rhymes.
How do the three charts above affect your thinking in terms of mortgages, buying or selling a house, or investing in real estate?
Don't discount those with a few grey hairs, they lived through previous cycles.
Executive Loan Officer
1 年Thanks for sharing Kent. Excellent info
What do you think, Kent? See rates coming down any time soon? Or are we here for a while?
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1 年Kent Kopen absolutely insightful posts that puts things into perspective. History doesn't repeat itself but it sure has a lot of the same elements in different forms. As Churchill once said "the further back I look the farther forward I can see."