And the Fedâs latest move wonât help⦠[Turn Your Images On] [This Housing Market Is Only Getting Worse]( [Turn Your Images On]
[Matt Clark,
Chief Research Analyst]( I don’t own a home. The reason may not make sense to you, but it did to me when I made it. In my past life as a journalist, I was never “home” for very long. I had road trips for sports or long hours doing extensive research for investigative pieces. I didn’t spend a lot of time at home or in one place, so the thought of buying a home was never really crossed my mind. You might think I regret my decision, but I don’t ⦠especially in today’s world. Let me explain. --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Curzio Research. [Easy 10x return]( Police departments across America are deploying a futuristic new device called the “Batman Gun.” Meet the no B.S. stock analyst who got shot... Get all the details about the tiny company that makes it... And why he thinks you could see a 10x returnâEASYâ[from this trade as it replaces the taser](. --------------------------------------------------------------- The Interest Rate Quandary A few days ago, I was in Mike Carr’s daily trade room and we started talking about mortgage rates â the interest charged on a home loan. The average rate on a 30-year fixed mortgage is just below 8% if you have good credit ⦠and above 8% if you don’t. That average rate has risen higher for the last two years: [Turn Your Images On] [(Click here to view larger image.)]( After years of the average mortgage rate fluctuating around 3%, homebuyers are looking at the highest interest rate since the turn of the century â close to 8%. Highest 30-Year Mortgage Rate Since 2000 [Turn Your Images On] [(Click here to view larger image.)]( That means, for every $1,000 you borrow, you will pay an extra $80 in interest to the bank. In real numbers, assuming you are buying a $300,000 home with 20% down at 3.25% interest (the average interest two years ago), your monthly payment would be $1,445, including taxes and fees. The same $300,000 home with 20% down at 8% interest brings that monthly payment up to $2,162. It’s a significant difference in monthly payments â $717 a month, to be exact. That’s a big reason why I â and millions of other Americans â are not buying homes right now. Even if I did own a home and wanted to buy a new one, the timing is awful because I would pay significantly more for a new home than what I’m paying for now. It’s one of the reasons why the housing market is struggling right now ⦠and why there will be more pain to come. Housing Market Woes to Continue This week, the Federal Open Market Committee held the fed fund rates as expected. So the obvious question ⦠especially for prospective homebuyers ⦠is: Why are rates still climbing higher? In March 2022, the Federal Reserve started its interest rate hike spree in hopes of tamping down inflation. That made it more expensive for banks to borrow. And as every business does, banks pass those costs along to consumers in the form of higher interest rates for every type of loan. As the Fed continues to hold rates higher for longer, bank costs continue to rise, thus rates continue to climb. So even though the Fed held its fund rates steady, bank costs will continue to grow and push loan rates â such as mortgages â higher. And that means new mortgage applications have hit a wall: [Turn Your Images On] [(Click here to view larger image.)]( The Mortgage Bankers Association Purchase Index tracks the mortgage applications on single-family homes in the U.S. It hit a two-year low at the end of October. The index is down more than 60% from its 2021 high and shows no signs of slowing down. People aren’t buying homes as much as before due to higher prices, higher interest rates and a lack of supply. Bottom line: As rates go higher and applications dwindle, the pain in the U.S. housing market is only going to get worse. For many owners and non-owners alike, you aren’t likely to buy because it’s too expensive. If you do own a home and are looking for a change of scenery, you aren’t likely to buy because ⦠well ⦠it’s too expensive. You’re better off just staying where you are and paying less. With the Fed’s “higher for longer” rate mantra, mortgage rates are only going to go up⦠It’s likely to only get worse for the U.S. housing market before it gets better. --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [Rare Chance to Be an Early Investor in AI Energy Breakthrough]( Technology expert Ian King has found a way to invest in the technology powering AI energy. A breakthrough that presents a once-in-a-lifetime opportunity for fast-acting investors. [Just go here for full details](. --------------------------------------------------------------- Tomorrow: How Housing Stocks Stack Up Managing Editor Chad Stone is going to run some of the most popular housing stocks through our proprietary Green Zone Power Ratings system to see if any are investable as interest rates remain elevated. Until then⦠Safe trading, [Matt Clark signature]
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets --------------------------------------------------------------- Check Out More From Stock Power Daily: - [FACTOR INVESTING MADE EASY]( - [INVESTING TO PREPARE FOR $150 OIL]( - [INTEREST RATES AT 7%?]( Privacy Policy
The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2023 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471) Remove your email from this list: [Click here to Unsubscribe](