Where will mortgage rates go in the next 1-2 years?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If 2 million are unemployed like Powell hopes rates will be in the 1-3% range.

No way. Not for another 50-100 years.

What do you think happens when 2 million people (or more) are unemployed due to the current moves by Powell? We will see relief (increased unemployment/stimulation checks/etc.) from congress similar to the pandemic and lowered interest rates. Guaranteed.

You are incredibly wrong. Stimulation checks are inflationary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If 2 million are unemployed like Powell hopes rates will be in the 1-3% range.

No way. Not for another 50-100 years.

What do you think happens when 2 million people (or more) are unemployed due to the current moves by Powell? We will see relief (increased unemployment/stimulation checks/etc.) from congress similar to the pandemic and lowered interest rates. Guaranteed.

You are incredibly wrong. Stimulation checks are inflationary.

That’s the entire point.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If 2 million are unemployed like Powell hopes rates will be in the 1-3% range.

No way. Not for another 50-100 years.

What do you think happens when 2 million people (or more) are unemployed due to the current moves by Powell? We will see relief (increased unemployment/stimulation checks/etc.) from congress similar to the pandemic and lowered interest rates. Guaranteed.

2M people out of 350M is not that much. Cost of doing business. Over 1M have died from COVID in 2 years and it’s business as usual.

[Anonymous]

Anonymous wrote:if anyone KNEW this, they'd be a very good rates trader and worth a gajillion dollars. No one knows. Everyone guesses.

the "mortgage rate" for conforming mortgages is a combination of a few things

1) the prevailing ~10 year treasury rate.
2) the spread above the 10 year rate at which mortgage backed securities trade

Both 1 and 2 are not predictable with any kind of precision. anyone who tells you they KNOW is overconfident.

So what would be my best guess over the next 1-2 years? I don't know, but we can tell what "the market" is predicting. I'm not 100% sure I'm looking at the right thing, but the 10 yr 2yr forward starting swap (ie the market's prediction of where the 10 yr swap rate, which is closely related to the 10 yr treasury rate, will be in 2 years) is approximately 4.3%. For context the 10 year swap rate now is 3.9%. So the market is saying that intermediate term risk free rates will likely rise by approximately 0.4% over the next 2 years.

So that leaves mortgage spreads. Right now they're historically high, as the Fed has stopped subsidizing mortgage spreads (they stopped buying mortgage backed securities). I'm not gonig to spend time on it or make a prediction, but I'll just say that if I had to GUESS, mortgage spreads MAY come in a little bit (this is a complex topic) from their historically high levels.

So I'd probably say the base case is something like "about where they are now" with 10 yr rates going up and mortgage spreads coming down.

But this all depends on a million unpredicatable things. Many highly intelligent hard working people who do this for a living will get it wrong.

So just do what makes sense with the information you have. Don't try to predict rates.

Probably the only accurate post in this entire thread.

[Anonymous]

My lender says they'll be back down to 4% in a year, LOL!!!

[Anonymous]

I’ll be shocked if we see dates at 5% or below in our lifetime.

[Anonymous]

ask this question in the money and finance forum for an honest answer. you are asking real estate agents and they will all tell you to marry the house and date the rate. because it is in their financial interest for you to do that.

[Anonymous]

Anonymous wrote:if anyone KNEW this, they'd be a very good rates trader and worth a gajillion dollars. No one knows. Everyone guesses.

the "mortgage rate" for conforming mortgages is a combination of a few things

1) the prevailing ~10 year treasury rate.
2) the spread above the 10 year rate at which mortgage backed securities trade

Both 1 and 2 are not predictable with any kind of precision. anyone who tells you they KNOW is overconfident.

So what would be my best guess over the next 1-2 years? I don't know, but we can tell what "the market" is predicting. I'm not 100% sure I'm looking at the right thing, but the 10 yr 2yr forward starting swap (ie the market's prediction of where the 10 yr swap rate, which is closely related to the 10 yr treasury rate, will be in 2 years) is approximately 4.3%. For context the 10 year swap rate now is 3.9%. So the market is saying that intermediate term risk free rates will likely rise by approximately 0.4% over the next 2 years.

So that leaves mortgage spreads. Right now they're historically high, as the Fed has stopped subsidizing mortgage spreads (they stopped buying mortgage backed securities). I'm not gonig to spend time on it or make a prediction, but I'll just say that if I had to GUESS, mortgage spreads MAY come in a little bit (this is a complex topic) from their historically high levels.

So I'd probably say the base case is something like "about where they are now" with 10 yr rates going up and mortgage spreads coming down.

But this all depends on a million unpredicatable things. Many highly intelligent hard working people who do this for a living will get it wrong.

So just do what makes sense with the information you have. Don't try to predict rates.

Thanks! I think I learned something on DCUM