Less than two weeks ago we cited Freddie Mac according to which the average 30 year US mortgage just rose above 6% for the first time since 2008, with real-estate brokerage Redfin commemorating the move by saying that “This Is The Sharpest Turn In The Housing Market Since The 2008 Crash.” Well, just a few days later, Jeff Gundlach was so kind to point out this evening…
That was quick. The National Average 30 Year Mortgage Rate posted at 7.08% today.
— Jeffrey Gundlach (@TruthGundlach) September 28, 2022
…that the national average 30 year mortgage rate just soared above 7.0%, hitting 7.08% and the highest since December 11, 2000.
This was the fastest 1% increase in mortgage rates in history; and the fact that it took place inside of a month is even more remarkable.
There is nothing we can add here that isn’t self-explanatory, and that we haven’t said already, like for example the fastest ever collapse in YoY Case-Shiller prices, as well as the first sequential drop in 112 years…
… not to mention that the typical home now sells for less than the asking price…
… but what is perhaps most remarkable is that according to the Altanta Fed, as of a few weeks ago, the median American household would needed 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.
Well, as of today, that number is just over 50%. That’s right: more than half of the average US household’s income goes to paying housing payments, nearly double what this number was just two years ago.
That such a move can’t end in anything but tears is obvious to everyone… but the Fed, which still thinks it can somehow avoid the most destructive of hard landings.