Today’s podcast discusses the reason why mortgage rates need to rise to create more balance in housing as we continue to break to new all-time lows in Inventory in 2022. Also, I discuss the recent Fannie Mae survey on why the consumer sentiment to buy a home is at all-time lows. (Hint) What else is at record all-time lows too?
Also, talking about the 2022 forecast on what I believed needed to occur for the 10-year yield to break over 1.94%.
“We had a few times in the previous cycle where the 10-year yield was below 1.60% and above 3%. Regarding 4% plus mortgage rates, I can make a case for higher yields, but this would require the world economies functioning all together in a world with no pandemic. For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.”
The one thing that has happened this year is that global yields have finally risen noticeably, especially Japan and Germany’s 10-year yield. This was a must for me to have the 10-year yield break over 1.94%, currently trading at 2%.
Now for us to create a range between 1.94% – 2.42% with duration. We need economic data to stay firm. We need global yields not to fall again and head higher. If the economic data gets weaker with the rate of inflation growth fading toward the 2nd half of 2022, bond yields should fall.
Also, in the podcast, I talked about the recent Fannie Mae survey showing it’s the worst time to buy a home. Here is a link to that recent article about the survey. Remember, I am no longer writing articles on my blog. If you haven’t joined Housing Wire Plus, please feel free to use my VIP code: loganvip50.
“We have always held to the hope, the belief, the conviction that there is a better life, a better world, beyond the horizon.” Franklin D. Roosevelt
Logan Mohtashami is a Lead Analyst for Housing Wire, financial writer, and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami, now retired, spends his days and nights looking at charts and nothing else