Click here: The Weekly Beacon – September 30 2022
We will be giving some macroeconomic market updates on a weekly basis. No
recommendations will be given in this commentary and we encourage you to contact us
today if you have any questions regarding any observations.
Feel free to send in your pictures of lighthouses to be featured in our weekly commentary.
This weeks issue: Mortgage Market, Interest Rates, Mortgage Rates Rising, Housing Market, Affordability in Cities, China, Chinese Economy, Chinese Economic Crisis, Chinese Yuan, ARKK, Ark Invest, Cathie Wood, Ark Venture Fund, Cathie Wood Cult, ECB, European Central Bank, Quantitative Tightening, Quantitative Easing, UK Yield, British Pound Sinks, ESG, JP Morgan Leads the way, ESG Lending, Cap Ex in Oil and Gas, Energy Investing, Goldman Sachs on Oil.
Mortgage Rates Set More Records
The U.S. 30-year mortgage rate spiked to 6.29% last week setting another multi-year record for the mortgage market. This is the highest level for the 30-year since October 2008. Comparing today’s rate to 18 months ago is staggering, it has more than doubled and could triple if interest rates were to continue to rise.
This has caused housing markets across the world to slow down after being red hot for almost 2 years. Even though the housing market has slowed, supply is still a major problem that is keeping prices elevated close to all-time highs.
The lack of affordability is driving a significant slowdown in the housing market. The median American household would now need to spend 44.5% of their income to afford payments on a median-priced home in the US, the highest percentage on record with data going back to 2006.
As Americans spend more and more on their mortgage payments, it is getting more expensive to live in various Metropolitan areas. Comparing 2022 salaries to affording the same homes in 2020 some of the largest jumps in income needed (to afford a home) are across southern U.S. states (Texas, North Carolina, Nevada, Oklahoma) where the population has grown the most during the last 2.5 years. This is a major reason why; southern housing prices have not dipped as much as markets in northern states and California.
Jumping back to the 30-year mortgage rate which is at a decade high but nowhere near its all-time high………… Easy money has led society to believe everything is simple. Imagine the 30-year mortgage rate above 10% like it was from 1980 to 1991.
