'The 30-Year Fixed Mortgage Rate Just Hit 8% For The First Time Since 2000 As Treasury Yields Soar' - CNBC
Portfolio Pulse from Benzinga Newsdesk
The 30-year fixed mortgage rate has hit 8% for the first time since 2000, due to soaring U.S. Treasury yields. This has led to a significant drop in mortgage applications. Homebuilders are using buydowns to help customers afford homes, a strategy not widely used in the past. The rate was as low as 3% two years ago, meaning a buyer purchasing a $400,000 home with a 20% down payment would now have a monthly payment nearly $1,000 higher than two years ago.
October 18, 2023 | 5:21 pm
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NEGATIVE IMPACT
D.R. Horton, the nation's largest homebuilder, may face challenges due to the rise in mortgage rates. They are using buydowns to help customers afford homes, a strategy not widely used in the past.
The rise in mortgage rates makes homes less affordable, which could lead to a decrease in demand for D.R. Horton's homes. The company's use of buydowns indicates they are already feeling the impact of these higher rates.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The S&P 500 ETF (SPY) could be impacted by the rise in mortgage rates and the subsequent drop in mortgage applications, as it reflects the overall health of the U.S. economy.
The rise in mortgage rates and the drop in mortgage applications could indicate a slowing economy, which would likely negatively impact the S&P 500 and, by extension, the SPY ETF.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 60