The skyrocketing rise of interests, the collapse of sales and the collapse of mortgages

Ultimately, the Fed’s restrictive policies caused the Armageddon real estate outbreak that many had anticipated.

This development is quite logical, if we take into account the sharp fluctuations in interest rates on American mortgages, many of which, among other things, are characterized by variability. This week has gone from dire to disaster, with 30-year mortgage rates rising at the fastest rate ever recorded, topping 6%, levels last seen before the property bubble burst.

This has led to an increase in the cost of mortgage payments,

Since the end of 2021, the premium cost has increased by as much as $750 per month, with a value of $2,500 many families are beginning to be unable to afford.

In fact, premiums are becoming less and less convenient and less affordable for consumers.

The costs are very high and unaffordable, so home sales are starting to drop, and we have a drop in new home sales, which were down at the peak of Covid 2020.

Except that in March 2020, there were closings associated with the first wave of covid-19, the narrow wave, which made it practically impossible to sell real estate, and also because those corrections, including remote corrections, were not prepared, which allowed for a very fast flow Resumption of negotiations.

Given that the crisis is already clear, according to Redfin, we have the highest percentage of sellers dropping the list price during the four weeks ending June 12,

If the prices are reduced, the seller obviously cannot be found.

Now what will happen is clear:

a) the real estate and construction market will stop, with a pronounced economic slowdown;

b) The number of payments due will be increased

So this crisis, for now only on paper, will become a real, real, systemic crisis, complete with a boom in defaults and a jump in mortgage-backed securities. Let’s go back to 2007…


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