30-year mortgage rates hit 7%

The morning meeting with Al Tompkins is a daily Poynter briefing with story ideas to consider and other topical context for journalists, written by Al Tompkins, Senior Faculty.

The last time 30-year fixed-rate mortgage rates were above 7% was in April 2002. Now FreddieMac says the average rate is 7.08% and rising. And 15-year mortgage rates average 6.36%. There is good news and bad news for people looking to buy a new home. The good news is that higher interest rates mean fewer buyers are vying for the same property, so prices should fall. However, buyers pay the higher cost of borrowing each month.

It might be useful to put this data in context. First, let’s look at how today’s prices compare to a year ago. A 30 year fixed mortgage averaged 7.08 percent with an average of 0.8 points as of October 27, 2022, from last week when it averaged 6.94 percent. A year ago at this point, the 30-year-old FRM averaged 3.14 percent.

FreddieMac’s website contained this passage from Sam Khater, Freddie Mac’s chief economist:

“As inflation continues, consumers are seeing higher costs at every turn, leading to a further decline in consumer confidence this month. In fact, many potential homebuyers are choosing to wait and see where the housing market will end, further depressing demand and house prices.”

Now, if we go back a decade, you’ll see that today’s rise doesn’t look quite as dramatic. It’s the valley rates from the pandemic era that make today’s rates look like mountains.

And if you’re wondering why your parents or grandparents aren’t too keen on 7% mortgage rates, it could be because they remember interest rates from October 1981 of more than 18%. The gray vertical bars are recession years.

I’ve drawn a red line on this long range graph to clarify another point. Notice in the chart below that the 7% interest rate we’re at today is closer to the average rate American mortgage borrowers have been paying over the last few decades, compared to the unprecedentedly low interest rates that are a result of the housing crisis and the… recession of 2008 followed.

There is a sure bet today. Minutes after Exxon tells us of its blockbuster third quarter, you’ll hear howls of protest and the voice of President Biden will repeat his warning earlier this year when he said, “My message to America’s energy companies is: They shouldn’t be consuming theirs Profits to buy back shares or for dividends. Not now. Not while a war is raging.” While most of the stock market is about 22% lower than a year ago, Exxon Mobil Corporation stock price has increased by 67% in the last year

Bloomberg reports The top five oil companies combined are expected to report earnings in excess of $50 billion in the third quarter.

Most of us are paying significantly less to fill up our fuel tanks than we paid this summer. Gasoline prices are down a quarter from their June peak, but diesel prices are down just 8%. One reason fuel prices paid by truckers and farmers have remained high is that supplies are tighter than normal. Right now there’s about a 26-day supply, which is 20% below the average five-year supply. USA Today reports:

Since diesel fuel is similar to heating oil, demand will increase House heating this winter. “This is worrying,” said Patrick De Haan, head of petroleum analysis, analyst for Oil and Refined Products at GasBuddy.com.

“If we don’t build up stocks between now and the end of November, the wolf will be around the corner,” Kloza said. “And it will look like a big, ugly wolf if it’s a cold winter.”

“There’s a real threat of something going parabolic in the energy chain and I think in general the concern is that something going parabolic is diesel and heating oil,” he said, noting that the timeframe that one should observe closely, is the dead of winter. from December 15th to February 15th.

Homeowners fill theirs fuel oil tanks and according to the US Energy Information Administrationthe average price for a gallon of home heating oil for the week of October 17 is $5.79, up from $5.48 last week and $4.64 the week before.

Around 5.3 million American homes use heating oil. Around 82% of households are in the northeast. The top 5 states are, in order: New York, Massachusetts, Pennsylvania, Connecticut and Maine.

Flu season is here and the virus is spreading fast. About 1,600 people were hospitalized with the flu here last week, according to the CDC.

The Walgreen Flu Index shows that the southern states are currently having the hardest time. Here are the cities with the highest infection numbers, with new data coming later in the week:

Top 10 DMAs with the highest flu activity
1. Harlingen-Weslaco-Brownsville-McAllen, Texas
2. Columbus-Tupelo-West Point-Houston, Miss.
3. Corpus Christi, Texas
4. Beaumont-Port Arthur, Texas
5. New Orleans, Louisiana
6. Columbus, Georgia (Opelika, Alabama)
7. Houston, Texas
8. Lafayette,Louisiana
9. Mobile, Alabama-Pensacola (Ft. Walton Beach), Florida
10. Montgomery-Selma, Alabama

Top 10 states with the highest flu activity
1.Louisiana
2. Mississippi
3.Texas
4. Alabama
5. Georgia
6. Tennessee
7. Arkansas
8.South Carolina
9. Puerto Rico
10. North Carolina

A New York Times article states that employers, increasingly keen to recruit, are discovering the treasure trove of skilled labor they once missed: people with disabilities looking for work. The Times noted that people with disabilities are not only getting more opportunities, but also better deals with more flexibility, including the ability to work from home:

“We have a last-in, first-out job market, and people with disabilities are often among the last and first out,” said Adam Ozimek, chief economist at the Economic Innovation Group, a research organization in Washington.

However, remote work has the potential to break this cycle, at least for some workers. in one new study, Mr Ozimek found that employment for workers with disabilities had increased across sectors as the labor market improved, which is in line with the usual pattern. But it’s been improving particularly quickly in industries and occupations where remote work is more common. And many economists believe that the shift to telecommuting will prove sustainable in contrast to the red-hot labor market.

More than 35 percent of disabled Americans ages 18 to 64 had a job as of September. That was a 31 percent increase just before the pandemic and is a record in the 15 years the government has been tracking.

The Times made a point I hadn’t considered. “A Recent study estimated by the Federal Reserve Bank of New York that nearly 2 million working-age Americans have been disabled due to long-term Covid.”

A researcher points out some interesting statistics about the recruitment of workers with disabilities. Employers report a 14% higher retention rate in the same roles compared to their able-bodied peers. Consider this summary:

The results of countless studies speak for themselves: when the right people with disabilities are selected for the right job and given responsibility, they often outperform other employees with increased efficiency, productivity, accuracy, commitment, loyalty and satisfaction. This, in turn, increases the company’s profitability and overall value to shareholders.

It’s too bad it takes a labor shortage to make employers aware of the untapped potential of workers that they used to overlook. But let’s turn to the Rolling Stones to summarize this lesson:

You can not Always Get What You Want
But if you ever try, you will find it
You get what you need