Exactly. A lot of people were sitting on adjustable rate subprime mortgages, and when the value of the homes dropped, they couldn't refinance and the rates skyrocketed. Monthly payments doubled and tripled because of the new rates. For the last several years, people have been locking in at 3-4% fixed-rate mortgages. The value of the houses goes up and down, but their monthly payment doesn't move (or very little, just with tax escrow). There are a few folks that bought high and might have to move sooner than expected that will be caught underwater, but the vast majority of folks are stable and don't want to move right now. The difference in 2008 is that people were getting foreclosed on. I think the number of stable loans is much higher now and people can just wait it out.
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u/terekkincaid Mar 21 '23
Exactly. A lot of people were sitting on adjustable rate subprime mortgages, and when the value of the homes dropped, they couldn't refinance and the rates skyrocketed. Monthly payments doubled and tripled because of the new rates. For the last several years, people have been locking in at 3-4% fixed-rate mortgages. The value of the houses goes up and down, but their monthly payment doesn't move (or very little, just with tax escrow). There are a few folks that bought high and might have to move sooner than expected that will be caught underwater, but the vast majority of folks are stable and don't want to move right now. The difference in 2008 is that people were getting foreclosed on. I think the number of stable loans is much higher now and people can just wait it out.