Economy

Minority Mindset: The Housing Market Is About to Go INSANE…

Posted on by Andrew Packer

It’s no surprise that home prices have been on the rise. For existing homeowners, that’s generally good news. For those looking to buy a home, it isn’t. And now interest rates are rising, and so are mortgage rates.

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    • The cost of home ownership is now growing 10 times faster than wages, which have been having a strong year coming out of the pandemic. This imbalance points to a correction in home prices ahead.

    One sign of this trend is the rise of interest in adjustable-rate mortgages, or ARM. As pointed out on the Minority Mindset YouTube channel, these loans haven’t been popular in a while. But they allow banks to make money now on loans as conventional mortgage rates rise and demand dries up.

    ARMs offer a teaser rate for the first 5 years of the mortgage. And if rates drop at any time before then, homeowners can potentially refinance into a lower rate. However, that may not be available – which could lead to soaring home financing costs down the line, and lead to a rise in foreclosures.

    While the housing market still looks strong, rising rates and lower transactions, combined with the rise of ARMs, points to a potential slowdown for home prices in the months ahead, although some markets will vary.

    To view the full details on rising homeowner costs and how it’s impacting the market, click here.

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