US Housing Market In Peril As “Increase In Mortgage Rates Has Shocked Consumers”
zerohedge.com / by Tyler Durden / Nov 27, 2016 3:30 PM
While rising treasury yields may be music to the ears of savers who have been crushed by low interest rates over the past 7 years, they’re a bit of downer for the overwhelming majority of Americans that have been funding their lavish lifestyles with cheap debt. Yes, sadly the days of upgrading to the $65,000 luxury car despite a $40,000 annual salary, because you can “afford it” so long as you can cover the low monthly payments courtesy of 7-year terms and low interest rates, may finally be coming to an end.
But auto OEM’s aren’t the only ones about to get crushed by the “normalization” of interest rate policies in the U.S. As the Wall Street Journal points out, according to the Mortgage Bankers Association, mortgage refinancings are set to drop 46% in 2017. And with many American’s funding their daily expenses with “cash-out” mortgage refi’s, pretty much everyone selling goods to consumers, which happens to represent about two-thirds of the economy, has reason for concern.
The fast rise in rates has spurred homeowners to pull back from refinancing their mortgages. Applications dropped 3% in the week ended Nov. 18 from the prior one, the seventh consecutive weekly decline, and the second since Election Day, according to data released Wednesday by the Mortgage Bankers Association.
The MBA estimates refinances will fall 46% next year, to $484 billion, which will hurt Americans’ ability to free up cash by reducing the cost of their monthly mortgages. The fall in refinances also will hit an important area of consumer-loan growth for banks. To slow the possible damage, banks already are pitching riskier loans that come with adjustable interest rates or allow borrowers to pull more equity out of their homes.
The post US Housing Market In Peril As “Increase In Mortgage Rates Has Shocked Consumers” appeared first on Silver For The People.
Source: http://silveristhenew.com/2016/11/27/us-housing-market-in-peril-as-increase-in-mortgage-rates-has-shocked-consumers/
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