Do you remember what happened in 2008? Many people believe that another historic financial disaster is coming and that it will absolutely devastate the U.S. economy.
Of course current conditions definitely resemble 2008 in so many ways. The residential housing market is so dead right now, and commercial real estate prices are plummeting at a very frightening pace. Unfortunately, officials at the Federal Reserve are making it quite clear that they are not done strangling the economy.
The average rate on the popular 30-year fixed mortgage increased to 7.09% this week, up from 6.96% the week prior, according to Freddie Mac’s latest release. That’s the highest point since the first week of April 2002 and marks just the third time rates have exceeded 7% since then. The last times were in October and November of last year, when the rate reached 7.08%.
Needless to say, high mortgage rates have been crippling the housing market in a major way. At the midpoint of this year, existing home sales were down a whopping 18.9 percent from the same time in 2022…
There are certainly lots of people out there that would like to buy homes, but thanks to how high mortgage rates have become they simply cannot afford to do so.
But apparently officials at the Federal Reserve believe that even more carnage is necessary, because they are indicating that more rate hikes are on the table…and that high inflation still poses an ongoing threat that could necessitate additional interest rate hikes this year.
Even if rates stay at current levels, we are headed for extreme pain. Raising rates even higher would just be suicidal. But it looks like they are going to do it anyway, and that could push mortgage rates up to the 8 percent level…
Unless the Fed changes course, the housing market is going to absolutely implode….And of course the commercial real estate market is already imploding.
The chaos that is already transpiring is putting an enormous amount of strain on our financial institutions, and Fitch is warning that we could soon see sweeping rating downgrades in the banking industry including the likes of JPMorgan Chase
In many ways, I feel like I am watching a repeat of 2008.
So I hope that you have been preparing for turbulent times, because things are going to get crazy.
Many people will lose their jobs during this new economic crisis, and because they don’t have any sort of a financial cushion to fall back on many of them will also end up losing their homes.
What we have experienced so far is just the tip of the iceberg.
So brace yourselves for what is ahead, because this ride is only going to get bumpier from here.
You have been warned…. Share your thoughts…