• The KillerFrogs

Macroeconomics / Stock Market Thread

Eight

Member
's
Some signs that supply chain issues are easing. Skyrocketing mortgage rates should slow the housing market. A year of high inflation will set the denominator level higher, so inflation rate will come down.

I’m hopeful in the next 12 months inflation returns to a normal range and we don’t need continued rate rises. Unfortunately the damage will be done to a degree… inflation has spiked prices so high and will continue to do so in 2022, and even if inflation slows, highly doubt we see any deflation back to old prices.

Elephant in the room is the stock market. Very well may end up with the trifecta in 2022… negative stock market, high inflation, rising/high rates. Hopefully that won’t result in the kill shot of rising unemployment. Lot of people got materially poorer in the last 12 months despite some wage increases (me included)

"sky rocketing" mortgage rates? isn't a bit of relative term since i am fairly certain we are still a long way from double digit interest rates
 

Eight

Member
I think it is the speed and the magnitude of the move. 30- year mortgages were 2.65% 16 months ago, now they are 5%. You can say 5% is low but your P&I payment on a house has basically doubled since this time last year.

$ 300-400 monthly difference on a 30-year fixed loan on $250K

a bigger bit no doubt, but we aren't to the 80's either
 

Wexahu

Full Member
I think it is the speed and the magnitude of the move. 30- year mortgages were 2.65% 16 months ago, now they are 5%. You can say 5% is low but your P&I payment on a house has basically doubled since this time last year.
Your math isn’t very good. The payments have increased a good deal, but have nowhere near doubled. Principal payments don’t go up when interest rates rise.
 
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FrogUltimate

Active Member
Mortgage rates close to doubling in 1.25 years is somewhat substantial in my book…. Understand it’s still low/medium compared to historical
 

Wexahu

Full Member
that actual math doesn't appear to be catastrophic and does anyone think chasing out the bottom tier of home buyers is going to slow down the market with all the institutional money out there in the residential home markets?
I think this mortgage rate increase still has a ways to go and is gonna result in the housing market coming to a grinding halt. It almost has to if history is any indication.
 

An-Cap Frog

Member
that actual math doesn't appear to be catastrophic and does anyone think chasing out the bottom tier of home buyers is going to slow down the market with all the institutional money out there in the residential home markets?
Are you saying that the mortgage interest rate market has been below the natural rate because of interference? Logic tells me that any increase in the market rates of borrowing should have an effect, just like raising the tax rate or raising regulation. I know I am conjuring Jude Wanninski here, but if the rate was supposed to be higher than why wasn't that rate higher if firms inherently maximize their profits?
 

Eight

Member
Are you saying that the mortgage interest rate market has been below the natural rate because of interference? Logic tells me that any increase in the market rates of borrowing should have an effect, just like raising the tax rate or raising regulation. I know I am conjuring Jude Wanninski here, but if the rate was supposed to be higher than why wasn't that rate higher if firms inherently maximize their profits?

first the key word among all those words is SHOULD

second, the firms don't set the rates and the firms don't run for re-election. why do you think the banks pump money into everyone's pockets

unless jude is who the beattles were singing about it is all theory and not real life
 

An-Cap Frog

Member
first the key word among all those words is SHOULD

second, the firms don't set the rates and the firms don't run for re-election. why do you think the banks pump money into everyone's pockets

unless jude is who the beattles were singing about it is all theory and not real life

Don't firms offer rates based on the market and their borrowing rate? Why wouldn't they offer a higher rate to maximize income if they could? For instance, for every 25 basis reduction in your offering rate will increase loan originations, but your margin is now lower.

I worked for a community bank in Chicago almost 20 years ago so it has been a while, but my fiend is CEO of a local mortgage loan company and we talk numbers all the time. https://www.compmort.com/

You don't know who Jude is???
 

Eight

Member
Don't firms offer rates based on the market and their borrowing rate? Why wouldn't they offer a higher rate to maximize income if they could? For instance, for every 25 basis reduction in your offering rate will increase loan originations, but your margin is now lower.

I worked for a community bank in Chicago almost 20 years ago so it has been a while, but my fiend is CEO of a local mortgage loan company and we talk numbers all the time. https://www.compmort.com/

You don't know who Jude is???

the key question is do i care to know and the answer is no
 

An-Cap Frog

Member
the key question is do i care to know and the answer is no
It is weird to me that you could continue in a conversation in which you purport to not care about. I don't know why you have anamus towards me. My questions were genuine, yet you take to mockery.

May you and your family have a very blessed Easter.
 

Bob Sugar

Active Member

Nasdaq struggling to get momentum today
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