from Katy at over an hour this
morning. Back to you. All
right, thanks, Justin.
Appreciate it. Mortgage rates
have had just gotten even worse
for consumers. The average cost
to borrow money for a home is
now more than 7%.
>> It hasn’t been that high
since 2001. Joining us to talk
about this morning’s Jeff
Ostrowski, an analyst with
Bankrate. Jeff, good morning.
How are you doing?
>> Good morning. I’m doing
well, that’s partly because I’m
not in the market for a
mortgage or mortgage rates of
spikes. And there’s the highest
level in more than 2 decades
and no kidding. And it was.
So so what are families to do
at this point? I’ve heard
someone say, hey, you know,
you’ve got to bite the bullet.
You’ve got to bite the bullet.
But what’s your advice?
Yeah, I would say if if you’re
ready to buy, if you need to
buy, just go ahead and do it
because it’s really hard to
predict what’s going to happen
in the next 6 months to a year.
And home prices are rising
again. And that’s the that’s
moving against buyers and
mortgage rates have been going
out and said they’re well over
7%. Now they’re they’re even
some economists are predicting
they percent in the near future
so I I would say if you’re
prepared to buy a home, if you
need a home and buy it.
>> Jeff, for the past decade,
families have sort of been used
to paying those rock-bottom
mortgage is so what has changed
kind of break it all down.
>> Yeah, so it’s a it’s
complicated. essentially what
we’ve had artificially low
interest rates for 2 decades
now. So this started back at
that with the September 11
terror attacks. Alan Greenspan
was worried about more attacks
and he cut rates pretty sharply
that inflated the whole housing
bubble of the mid 2 thousands
and went to the crash and the
Great Recession. And so than
the Fed had no choice but to
keep rates low. And so I guess
what happened was the COVID
stimulus works really And so
that it caused and now that the
economy is doing really well,
the Fed has had to raise rates
pretty sharply to contain
inflation and that his lead
through to too much higher
mortgage rates. So that more
than doubled over the past
couple years.
>> One of the things I like
to do it to the bank rate
website. Look at the hist
Oracle figures. Mortgage rates
may be just to make myself feel
a little better. I got like
look back to when I was a kid
My parents were paying, you
know, whatever, 10 double digit
percentages. And I know it was
a different time. Houses
weren’t so expensive, but so
what do you make of that
historical view?
>> Yeah, you’re right. So when
in 1981 Boomer parents to
remind us that they paid 18%
mortgage And so that was the
peak. But throughout the 80’s
and mortgage rates averaged
12%. So but much higher than
they are now. And even
throughout the 90’s, it was not
uncommon for for mortgage rates
to be in the 8, 9.10%, range.
So it it’s not unprecedented
for mortgage rates to be this
high. Am I the real struggle?
The real challenge for buyers
is that so that the last time
mortgage rates were this high,
the typical home price was
150,000. Now it’s more like
400,000 plus. So we’ve got this
combination of home prices that
have soared it partly because
of low mortgage rates over the
past 20 years, and now mortgage
rates that are that were normal
back at a time when home prices
are
much lower. So, yes, it’s
possible for housing market to
function. It’s possible for
people to buy homes when
mortgages are in the double
digits. It’s just stuff now
because that home prices have
gotten so high compared to
where they’ve been and that
they were in American history.
>> Yeah. So, Jeff, I mean,
bottom line, if you’re looking
to buy home now, would you
recommend doing it now?
>> Yeah, I mean, if you’re
ready and you’re you’re able to
buy that and then do it.
Now there’s word that there’s
risks to waiting. I mean, yes,
it’s possible that we could
have a home price correction,
but it doesn’t seem like things
are going that way. It’s
possible that mortgage rates
could pull back by a point or
2, but that that also doesn’t
doesn’t seem to be the trend at
the moment. So, yeah, I would
say if if you’re in the market
to buy and you’ve you’ve got
everything lined up financially
that I would say do don’t try
to predict the future and then
just to do what’s best for you.
Now.
>> Yeah, it and hey, if things
go that way, you could always
refinance potentially, right.
I mean, like you said, the
family needs, you need it.
You can’t really control when
that happens. Jeff Ostrowski