As mortgage rates dip below 7%, ‘millennials should jump at a 6% mortgage like bears grabbing for honey’

- Advertisement -


Mortgage rates fell slightly to 7% after inflation eased following a better-than-expected economic report. A financial supporter says the dip is an opportunity that potential home buyers should not miss.

- Advertisement -

“Millennials should be pledging 6% like bears grabbing for honey,” Bill Smed, founder and president of Smed Capital Management, told MarketWatch.

- Advertisement -

“The spread in the 10-year Treasury TMUBMUSD10Y,
3.819%
The rate and the 30-year mortgage rate have reached ridiculously high levels. It’s unusual for a 3% spread,” Smed said.

According to the Mortgage Bankers Association, there are 50 million people in the US aged 28 to 38, some of whom are likely potential homeowners. For people under the age of 35, the homeownership rate is only 39%, the MBA said, while it is 61% for those aged 35 to 44.

- Advertisement -

The cost of living in the US is finally showing signs of slowing, a. According to November reportThe increase in annual prices for consumer goods and services increased from 8.2% in September to 7.7% in October. Responding to inflation data, the mortgage rate fell from 7.22% on November 9 to 6.62% on November 10, according to Mortgage News Daily.

Home-builder stocks have faced sharp increases in mortgage rates, Smed noted.

Many home builders have expressed low confidence given the reduction in buyer traffic. Builder’s confidence dropped for the 10th consecutive month in October National Association of Homebuilders toldAnd, with the exception of the period at the start of the pandemic, buyer traffic fell to the lowest level in 10 years.

An analyst told MarketWatch earlier this month that buyers were giving up contracts to buy new homes from builders at much higher rates than before.

“Regardless of what the Fed is going to do, the peak of the bottleneck on mortgage rates relative to the rest of the interest rates set by the Fed was about a month ago,” Smed said. “There was serious pessimism attached to these home-builder stocks. They are in much better shape than the last time the economy went through a rough patch. It was wrong to treat him like that.”

Smed said the macro creates a solid runway for trend builders and sellers.

“We know that there is a large pool of home buyers. We know that people are willing to move an average of 50 miles away from their place of residence to buy a home.” “Those dynamics will be put into gear if those mortgage rates move back to historic levels relative to 10-year Treasuries.”

Credit: www.marketwatch.com /

- Advertisement -

Recent Articles

Related Stories