Maturity Wall
Roughly $930 billion in commercial mortgage loans are scheduled to mature in 2024. source : tme
BREAKING: Mortgage demand fell to a new 30-year low in January 2024, down 54% from the pandemic peak, according to Reventure.
Mortgage demand is down 14% over the last year and 40% from pre-pandemic levels. Source: The Kobeissi Letter, re:venture
As highlighted by The Kobeissi Letter, a record ~40% of all US homes currently do NOT have mortgages
At first, this seems like great news, but it really just emphasizes how UNAFFORDABLE this market is. Currently, a record ~35% of housing market transactions are all cash purchases. In other words, this market is becoming ONLY affordable for those who are buying with CASH. As interest rates hit 20-year highs and home prices are up 30%+ since 2020, affordability is only getting worse. This is called an affordability crisis. Source: The Kobeissi Letter
The chart below shows the distribution of interest rates on outstanding US mortgages
Over 30% of borrowers have rates below 3%, up from just ~5% of borrowers prior to the pandemic. Virtually no new mortgages are being taken out at 7%+ interest rates that we currently see. real estate market seems to be frozen Source: The Kobeissi Letter, ICE
Mortgage demand is now down 50% from pre-pandemic levels and at its lowest level since 1994
From its peak in 2021, mortgage demand is down ~64%. Current mortgage demand is ~75% below the 2005 peak. The most incredible part of this? Mortgage rates are still only at their historical average. Housing market activity is coming to a halt. Source: The Kobeissi Letter
Who's buying houses with record high prices and 8% mortgage rates. The answer?
Millennials are piling in to new mortgages even with the spike in rates. Since Q4 2021, Millennials have seen a ~20% increase in mortgage debt. This is the same group of people who just had student loan payments return at an average of $500/month. It's a tough time to be a Millennial... Source: The Kobeissi Letter, BofA
Average interest rate on a US 30-year mortgage rises to 7.95%, its highest since July 2000
Mortgage demand also just fell to its lowest level since 1995. 8% mortgages are the new normal. Source: The Kobeissi Letter
BREAKING: Average interest rate on a 30-year mortgage rises to 7.93%, its highest since July 2000
Since January 2021, less than 3 years ago, interest rates have gone from 2.65% to 7.93%. This means that homebuyers just 3 years ago would see their interest rate TRIPLE if they decided to move. This is exactly why existing home sales are at their lowest since 2010. The average new home is about to cost LESS than the average existing home for the first time since 2005. You know something is wrong when old costs more than new. Why sell if your mortgage rate triples? From The Kobeissi Letter
