CHM Blog

Trapped at Home:

These Cities Have The Most "Trapped" Homeowners By Their Low-Rate Mortgages

Millions of Americans are sitting on very cheap mortgages, trapped in their homes in this high-rate environment. For them, moving is no longer an option.

A new study from MoneyGeek found homeowners in the southern part of the US feel the most trapped. In four cities, Gainesville, Georgia; Atlanta-Sandy Springs-Alpharetta, Georgia; Ocean City, New Jersey; and San Diego-Chula Vista-Carlsbad, California, homeowners were the most trapped.

MoneyGeek researchers analyzed data for 312 metro areas across home values, historic mortgage rates, and housing supply and demand trends. To determine cities with the most trapped homeowners, average mortgage spending had to increase while the housing supply deceased.

Most trapped homeowners were in the southern part of the country: Gainesville and Atlanta, Georgia, rank as the No. 1 and No. 2 metro areas where homeowners are most trapped in their mortgages. Homeowners looking to buy would face increases of more than 82% in annual mortgage spending. Further south, in the Naples-Marco Island area of Florida, mortgage costs have more than doubled since 2021.

In the Northeast, the report found Ocean City, New Jersey, had the most: National housing trends reveal a tightening grip on supply and demand. In the Northeast, Ocean City, New Jersey, is seeing a 31.7% plunge in housing supply, while Austin, Texas, grapples with a 56.5% surge in listing-to-close time, signaling a dip in demand.

Southern California also made the top of the list: San Jose, California, has the highest average mortgage payment, which surged by 67% to $8,110 per month between 2021 and 2023, posing a challenge for budget-conscious homeowners. To manage this cost without exceeding 28% of income, prospective homebuyers would need an annual income exceeding $420,000.

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher so far today. The MBS market worsened by -26 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Manufacturing and 3) Treasury.

1) The Fed: This week we have the Kansas City Federal Reserve's Economic Symposium in Jackson Hole, WY. There were plenty of coverage which really heats up on Wednesday. The focus will be Friday's speech by Fed Chair Powell but leading up to that we will have plenty of speeches/interviews by Federal Reserve District Presidents and Governors. The bond market is going to be extremely sensitive to discussions around economic growth, Fed policy, their forward guidance on interest rates and inflation.

2) Manufacturing: We get some key manufacturing news this week with Durable Goods Orders and the Richmond Fed MFG survey. The final UofM Consumer Sentiment Index and inflation expectations will get plenty of attention.

3) Treasury: We started this big sell off and trend lower with the Treasury's 30 year bond auction on August 10th. We have an important 20 year Treasury bond auction on Wednesday.

This Week's Potential Volatility: High

This morning markets are trending towards higher rates. Volatility has started high and will remain that way throughout the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.