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so i've been keeping tabs on ongoing mortgage rates and such even though we closed on our house at the end of march. you'd think i'd be glad to be done thinking about that stuff for a very long time (hopefully), but it's probably the thrift store hunter in me that wants to check and see if we got a good deal or we did the equivalent of drunken midnight ebay bidding (never good). we like the house, the mortgage is affordable and comparable to rent, but yeah, maybe we paid a premium just to lock down something. at our budget it's not too much $$, but i doubt we will ever think of this house as an investment vehicle to fetch us a fat profit. and that's fine, it's still a more sensible monetary choice than renting (probably), and we have improved quality of life even with the slappers. there's always coulda-woulda-shoulda with timing on such a significant purchase.
anyway, shit's been going down with the mortgage rates and such since march. they've been increasing like crazy since we purchased and i've been watching how that has impacted other people like us, just trying to secure an affordable home in a rabid market, whatever that means in their local area. people are looking at the total mortgage payment with the higher interest rates and balking. people who have put money down on new construction to avoid the squirrely offer process are getting borked on the rising interest rate due to their closing dates getting delayed for months, and having to back out. since house prices are so high to begin with, this means there's nothing in decent shape that is affordable. here in anchorage, 280-300k seems to be the sharp dividing line between "undesireable/serious fixer upper" and "normal okay house". banks may not even touch these sub $300k homes, effectively removing the discount options. we had the VA loan and they won't touch condos, won't touch fixer uppers. you can't just get a mortgage on anything you want - the bank has to think it has good value. so a lot of people have given up on purchasing and are forced to continue renting at current inflated rates. the big players in the rental market have trained their algorithms to fetch max profits and they have reached critical mass to effectively dictate the market. if there's 10 chairs in a musical chairs game and only 3 chairs are affordable, they know they can price their 7 chairs at slightly above affordable and people have to scramble to figure it out. and then the 3 underpriced chairs think, "wait, they're getting how much more? so i can raise rent next lease period?" and the game continues. plus, landlords have figured out that lower income tenants cause more problems (reliability/damages), so they want to price high to disqualify poor people deliberately by effectively discriminating via income (i know, duh, capitalism). nobody wants to house the working class. NOBODY WANTS TO HOUSE THE WORKING CLASS.
this is a shitstorm. housing costs are not sane right now, and there's not enough incentive to return to sanity. the horse has the bit in its teeth. if you make less than $40k, you are not wanted as a tenant and you better hope for luck. this is awful.
so something happened with the MBSs on friday when the inflation rate got released and basically it means that the players in the market have figured out it is not profitable enough to purchase these securities at current inflation rates/interest rates. this will force lending rates to increase to a point where the players find the profits enticing enough to buy these packages of mortgages at current inflation levels.
so interest rates for mortgages will likely continue this dramatic sharp increase that they've been on since march. this means: more people get priced out of owning and have to commit to a rental lease, more people who put money on new construction months ago are going to realize they cannot afford the mortgage at closing time. they will have missed their homeowning window (for a bit) and thrown away thousands for nothing. they will look for a rental. also, banks will have to get pickier about who they lend money to because they need a buyer for the mortgage to get money back to lend out again.
do you see where this goes?
it's just a couple of dominoes, right? the pandemic taught me that nothing happens as quickly and transparently as you would think is logical, because there is a ton of incentive to see things as "not that bad". maybe simple human nature to self-deceive, maybe corpos playing pied piper to the poors. the worse it is, the less likely it will be discussed honestly in the news and among lawmakers, right?
i see bad things and a society unable to be honest enough with itself to actually solve the problem. (which goes for the pandemic and climate change too, surprise surprise.)
will be interesting/horrible to see this play out.