On: Mortgage Rates Jump Above 6%, Putting Pressure on Housing Market

[bombcar]

Mortgage rates hit 2% below inflation. Hmmm.

Somebody’s doing the subsidizing.

[dragontamer → bombcar]

Today's rate of inflation means very little to a 30-year mortgage.

The rate of inflation 5, 10, 15+ years from now is what matters.

But if you think inflation really will be that high for so long, I got some TIPS to sell you...

[mucle6 → dragontamer]

But can't people refinance? Is the bank offering lower % interest that is subsidized by people who don't refinance?

[dragontamer → mucle6]

I have a 2.3% mortgage.

Do you think I'm going to refinance today? No. The bank is stuck with 2.3% from me for the next 15 years. Its a bad deal for them, and a great deal for me.

As long as interest rates go up, there's no refinancing to occur. Its financially the wrong move for the property owners.

[bombcar → dragontamer]

It's not even a bad deal for the bank, they sold your mortgage to a bond long ago and collect some fees.

[bombcar → mucle6]

The mortgage rate is basically set by whoever is buying the bonds they are packaged as. So it floats a certain points higher than treasuries, usually.

[sarchertech → mucle6]

Fees mean that the bank will still making money if you refinance in the very short term.

Inflation isn’t likely to stay 8% for long.

[colinmhayes → bombcar]

Banks loan out the "same" dollar multiple times since each borrower ends up keeping their money at the bank. Interest rates don't have to be above inflation for the bank to make money on the loan.

[crooked-v → bombcar]

Inflation numbers are an average, not a baseline.

[hackernewds → crooked-v]

as are mortgage rates