Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
2020. A year that goes down in infamy. The Covid outbreak and the government’s insane overreaction to it. Masks and massive spending, driving up housing prices.
After 2020, mortgage originations plummeted while housing prices soared.
US home prices took off like a scalded cat after the Federal government went on a massive spending spree in 2020.
The US mortgage market is “livin’ on a prayer.” As a result, former homebuilder and current FHFA Director Bill Pulter has suggested 2 mortgage products to make US homes more “affordable”, adding to the legacy of stupid government policies to increase homeownership.
But first, current mortgage demand. Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 7, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 31 percent higher than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 147 percent higher than the same week one year ago.
Now on to Pulte’s stupid mortgage proposals.
Pulte Doubles Down After 50-Year Backlash, Proposes “Layaway Mortgage”
The 50-year mortgage is a stupid idea. True, it can reduce the monthly mortgage payment by several hundred dollars. But it extends the life of the mortgage from 30 to 50 years, keeping the outstanding mortgage balance elevated for longer, exposing the lender (or mortgage owner) to greater losses in the case of default. Not surprising since the duration risk of a 50-year mortgage is greater than on a 30-year mortgage. Who is going to hold these mortgages??
So, Pulte hearing that the mortgage market thinks this is a stupid idea, introduced another stupid mortgage idea: the “layaway mortgage” where buyers make payments for 5-10 years before they’re allowed to move into the home. This is a variation of “rent to own.”
Under Pulte’s Layaway Mortgage program:
▪️ Buyers select a home and begin making monthly payments immediately
▪️ They continue paying for 5-10 years (the “layaway period”)
▪️ During this time, they cannot live in the home, modify it, or even visit without an appointment
▪️ After the layaway period ends, buyers can move in and begin their 40-year mortgage
▪️ If they miss a payment during layaway, they forfeit everything and the home goes back on the market.
So, in other word, a 50-year mortgage (40+10 layaway).
Note: Japan used to offer 100-year mortgages during their housing bubble, but now 35-year mortgages are more common.
Redfin’s Housing Turnover Report, Q1–Q3 2025
Just 2.8 homes out of every 1,000 changed owners in the first nine months of 2025—the lowest turnover rate in at least three decades. This marks a 38% plunge from the 2021 frenzy, when 44 per 1,000 homes sold, and is 44% below the pre-pandemic 2019 pace of 40 per 1,000.
Why the freeze? – Rate lock-in: Over 70% of homeowners are sitting on sub-5% mortgages and are reluctant to trade them for today’s rates exceeding 6%.
Sticker shock: Record prices combined with high borrowing costs have left many potential buyers on the sidelines. The result is a housing market that remains stagnant.
*Home prices are relatively high as are mortgage rates.
Someone will undoubtedly write me to look at Singapore. Yes, I know. Been there, done that. Or London.
In the US, the lowest turnover rates are in Democrat strongholds New York and California.
ADP is reporting 42k jobs added in October (better than expected).
The breakdown. Education and health care, and trade, transportation, and utilities led the growth.
Mandami, as expected, was elected Mayor of New York City. He does have a nice smile.
𝗠𝘂𝗹𝘁𝗶𝗳𝗮𝗺𝗶𝗹𝘆 𝗗𝗲𝗹𝗶𝗻𝗾𝘂𝗲𝗻𝗰𝗶𝗲𝘀 𝗦𝗼𝗮𝗿 𝘁𝗼 𝟳.𝟭%.🚨
Office CMBS Delinquency Rate Hits Record 11.8%, Much Worse than Financial Crisis Meltdown. (Wolfstreet)
CMBS excess returns are dwindling.
How will New York City commercial real estate returns perform if Madami wins the NYC Mayoral election?
Yesterday, The Federal Reserve Board of Governors lowered their target interest rate by 25 basis points to 4%.
And on that decrease, the US Treasury yield curve rose slightly.
And mortgage rates declined with the cut in The Fed’s target rate.
For an interesting read, try David Stockman’s “How To Cut $2 Trillion Om Federal Spending.”
September US home sales printed at 4.06 million units.
The US still hasn’t recovered from the Covid 19 outbreak of 2020 and the Fed’s response to Covid.
On the commercial real estate side, CRE prices remain below Covid 19 outbreak levels.
The September drop in mortgage rates is sparking the biggest boom in refinancings since the pandemic. Mortgage-refinancing applications have surged above the decade average, despite that period including the record-breaking refi boom of 2020-21 when rates fell to all-time lows. Purchase-loan demand has also rebounded to its best for this time of year since 2022, yet remains well below pre-pandemic levels.
Purchase demand (applications) nearing 2022 levels.
While not mortgage-related, gold is soaring!!
Thanks to Bloomberg’s Erica Adelberg for her amazing charts.
Can we ask the US House and Senate if they will ever return US Federal government spending to pre-Covid levels? Both US Federal government spending and public debt are up 56% since the Covid outbreak in 2020.
The answer is no. Politicians thrive on Federal spending.
Shutdown!
Mortgage applications decreased 12.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 26, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 12.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 16 percent higher than the same week one year ago.
The Refinance Index decreased 21 percent from the previous week and was 16 percent higher than the same week one year ago.
Mortgage rates increased to its highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data. After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with the view that refinance opportunities this year will be short-lived.
Yes, the Federal government has shut down.
Confounded Interest - Anthony B. Sanders 
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