[jnosCo]

Interest rates doubling over the past year change the math on this. For instance, to keep my same mortgage payment, even with significant equity, i could only afford what I paid for the house originally, which would be a significant downgrade in today's market.

[SoftTalker]

> even with significant equity

Yep, and if you fell for one of your lender's incessant pitches on borrowing on your equity or refinancing and taking equity out, you're really locked in to your situation. I'm very convinced that most people doing home equity loans or refis with cash out don't understand how much they are backsliding when they do that.

[sokoloff]

I think that depends on what they did with the cash. If they invested it in the S&P 500, that was generally a very good trade. If they turned it into new cars and expensive vacations, well, that was hopefully something that they really enjoyed, because those are things that are even more expensive when financed.

[nonethewiser]

That assumes you started your mortgage in roughly the last 10-15 years in the US or somewhere else with the same rate history. Average rates before then were consistently higher. https://fred.stlouisfed.org/series/MORTGAGE30US

If you started your mortgage before then its a neutral to positive rate-wise.

[giaour]

Many holders of higher rate mortgages refinanced during the last 10-15 years, too.

[subsubzero]

agree, what really makes me upset is how housing prices in certain areas has not gone down at all given that rates are double what they were a year or 2 ago. The un-affordability is beyond reason.

[lotsofpulp]

It is just supply and demand. Supply is half of what it used to be.

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg...

https://www.calculatedriskblog.com/2023/05/housing-may-15th-...

The supply demand situation is probably even worse in high demand areas.

[rightbyte]

Prices are sticky and people are way more emotional when it comes pricing their home than other things.

Those who refuse to sell now are just keeping up the price for the ones who do sell. If the price is not sustainable ot will go down.

[benjaminwootton]

Lots of people have made that point, but I’ll respond here.

Yes this is true, but only at this point in time when interest rates have shot up from historically low. Most of the time this won’t be the case, and soon this effect could work in the other way in that you could move to a house of similar value for a lower cost if interest rates come down.

And the 30 year fixed rate mortgage is unique to the US. Here in the UK, we only fix for 2-5 years typically.

So easy on the downvotes!

[nradov]

It is actually pretty much the case for most US homeowners. Everyone I know refinanced their mortgages when interest rates were lower. I got a 2.874% 30 year fixed rate mortgage in 2021 which was a great deal, but now I am essentially stuck here. There's no way I can afford to move. Existing home sales volume is way down.

https://www.wsj.com/articles/low-mortgage-rates-home-sales-l...

https://ycharts.com/indicators/us_existing_home_sales

The situation may be different in other countries.

[throwaway2037]

You wrote:

    There's no way I can afford to move.

You are lucky to win the housing lottery. Congrats! Can you imagine being a young couple (20s 30s) trying to buy your first home the US right now? Hopeless. Wait a few years as an oppressed renter!

[nradov]

Yes, I am lucky in many ways. But the US home ownership rate is 65%, so it's hardly a lottery. Many young couples are buying homes in lower cost states like Utah, Minnesota, and Ohio. HN users focusing on California often have a distorted perspective on the situation out in the real world.

[0cf8612b2e1e]

California is home to more people than those three states combined.

[throwaway2037]

I am very symphathetic to this issue for UK borrowers. They face way too much interest rate volatility. There is a gambling effect in the UK about housing.

Are you aware that 30-fixed in the US is essentially gov't backed via three mega pseudo-gov't guaranteed orgs called Fannie, Freddie, Ginnie Mae? It is great for increasing home ownership and utterly oppressive to low income people renting. It is tough.

I cannot believe that more countries do not (politically) prioritise a similar system: Cheap, fixed 30-year'ish home mortgages. To be clear, I'm not saying this is economically ideal, but it is great for your political party!

[bobthepanda]

Do people expect interest rates to lower again any time soon? Inflation just recently started trending down.

Right now US supply has shrunk so prices don’t seem to be declining enough to offset the rise in interest rates; the monthly payments for anything in the market are still eye-watering even factoring in price declines.

[nonethewiser]

Well if you expect them to rise or stay the same for a while then now is actually not a bad time to buy.