Mortgage orgy in the USA – there is a simple reason

Hypotheken laufen wie wild - typisches Haus in US-Vororten

Mortgage orgy in the USA – yes, that is no understatement! “Never mind”, some people would probably say about the overall situation in the USA. Millions of unemployed US-Americans. Thanks to more and more new corona infections, restrictions are again increasing in parts of the USA. Many US citizens have a job problem. But since the state is currently flooding many citizens with money, some citizens currently have even more money available each month than before the crisis. So the crisis doesn’t seem that bad financially? And “never mind”, will the lost jobs come back, or will there be new jobs in other industries soon? Somehow it will be okay?

The Mortgage Bankers Association publishes mortgage application data for the USA once a week. Just currently, it released data for the last week. And lo and behold. Mortgage applications increased by 5 percent week-on-week, and more importantly, compared to the same period last year, they increased by as much as 33 percent! Hello? Yes, 33 percent higher than last year! So, no more crisis. Party, buy, but for real! The volume of loans increased by 2.2 percent compared to the same period last week. The average home loan rose to a record high of 365,700 Dollars.

According to the industry association, this rush on mortgages in the US has a very clear reason. The interest rates for home loans had fallen to a new record low. The fixed interest rate for 30-year terms fell by 53 basis points to 3.26 percent since March. (3.37 percent four weeks ago) Well, the Fed has cut interest rates. The market is being flooded with money for all players (banks, companies, citizens). So the interest rates for home loans can only plummet to the bottom. And the bull market in the housing sector is still being fired up. As if the corona crisis did not even exist in the USA!

Bottom line

What do you learn from this? The party goes on, and the economy should/must get going again by hook or by crook. It doesn’t matter whether the national debt is 5 or 10 trillion Dollars higher afterwards. Or whether the consumers are also significantly more indebted afterwards. The party must continue under all circumstances. So, what do you learn from this? Straight into the US stock market, because prices will continue to rise if the total consumer party in the USA continues? (The party includes the purchase of a new house every few years)….

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