US FIXED MORTGAGES LIMITING SUPPLY

By: Nadeem_Walayat

No one wants to sell their home and then be forced to re-mortgage their next property at a much higher rate, typically double their current rate i.e. 7% vs 3.5% which acts to restrict the supply of homes coming to the market and thus those that do decide to sell i.e. the mortgage free command a higher price due to lack of supply where in the US 92% of mortgages are fixed unlike the UK where even those with fixed rate mortgage are typically for less than 5 years.

Way back for a whole year from around Mid 2021 to Mid 2022 I repeatedly wrote and replied to whenever asked that this is one of those no brainier moments to fix a mortgage for as long as possible where you lucky folk in the US could lock in a sub 3% rate for as long as 30 years! Whereas in the UK typical number crunched fixes would only extend to about 5 years. You cannot get much more of a no brainier than having rates of under 3% when the inflation rate was rocketing higher where we had a clueless Fed stuck in transitory mode compounding the magnitude of their error with each passing month that they delayed acting resulting in a huge spread of 4% between the inflation rate and the average 30 year mortgage rate by the end of 2021 which was unsustainable as I wrote during 2022. It is totally abnormal for the mortgage rate to be 4% BELOW the inflation rate! And that when measured against the the FAKE CPLIE rate rather than real inflation.

This has not happened this side of 1980. Those expecting US mortgage rates to fall back to sub 3% so they can move house are not going to see that happen, not in our high inflation environment as I expect we are going to see several more WAVES of inflation of which 2022 was just the first wave, it may take another year or so until the next wave starts taking off and thus mortgage rates only have a limited scope to come down to fill the current 7.3% to 3.3% gap, but I doubt we are going to see sub 3% for the remainder of this decade, even sub 5% is going to be a stretch which means all those with 30 year fixes at sub 3% are not going to want to sell and remortgage anytime soon which will act to limit supply of those mortgaged homes for the remainder of this decade.

Though of course this is only one piece of the housing puzzle because as house prices go up then more new homes are built and existing home owners decide to cash in by downsizing.

This article is an excerpt from extensive analysis US Housing Market Analysis, House Prices Trend Forecast 2024 to 2026 that was first made available to patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $7 per month, lock it in now at $7 before next rises to $10 per month for new sign-ups. https://www.patreon.com/Nadeem_Walayat.

CONTENTS

Stock Market Trend Forecast
US Stock Market vs M2 Money Supply
AI Stocks Portfolio
Nvidia 10 for 1 Stock Split
AI Computers Hype
2024 - AI Equals Loss of Agency
Why Alien Intelligence Cannot Predict the Future
Consequences of AI
UBI - Universal Billionaire Income
GLOBAL WARMING Housing Market Consequences Right Now
RECESSION When Yield Curve Uninverts
Global Debt Bubble.
IMMIGRATION DRIVES HOUSE PRICES HIGHER
US Housing Market Free Equity
US FIXED MORTGAGES LIMITING SUPPLY
HOA Nightmare
Florida Hurricanes
Rentals Crisis
Who is Buying All the Houses?
Commercial Property Capitulation
US House Prices Momentum
US House Prices Trend Forecast
US Housing Market Stocks
UK General Election - 4th July 2024

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By Nadeem Walayat

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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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