When mortgage rates last soared this much – Orange County Register

0

“Memory Lane” takes a stroll through financial history because the economy has a funny habit of repeating itself.

Buzz: Mortgage rates suffered their largest one-week jump since 1987.

Source: The average 30-year fixed-rate mortgage from a survey by Freddie Mac.

Numbers: Rates soared to 5.78% on June 16, up 0.55 percentage points from 5.23% seven days earlier. In April 1987, rates skyrocketed 0.84 points in a week, jumping to 10.27% from 9.43%.

How long ago?

Let’s jar your memory …

1987 news: The Iran-Contra scandal gripped U.S. politics, Iraqi missiles struck the USS Stark amid the Iraq-Iran war, and televangelist Jim Bakker and US Sen. Gary Hart are both caught in infidelity scandals. Locally, there was the Rodney King beating and the Whittier Narrows earthquake rattled the San Gabriel Valley.

1987 culture: Beverly Hills Cop II was tops at the box office and “Livin’ on a Prayer” by Bon Jovi was No. 1 on the charts. The first Panera Bread opened. The Los Angeles Lakers won the NBA championship.

The backstory

In 1986, a massive federal tax card pushed by then-President Ronald Reagan put lots of cash in the checkbooks of Americans.

At the same time, the Fed had been undo its high-rate policies that knocked down the inflation rate — and stalled the economy.

The Fed Funds rate the central bank controls had fallen under 6% in the fall of 1986 after approaching 20% earlier in the decade. It was a 10-year low for this key rate.

Mortgage rates acted as you’d expect, falling to 9% in February 1987 — the lowest in a decade. That certainly explains the 7% price gains for California homes in 1986.

FOLLOW US ON GOOGLE NEWS

 

Read original article here

Denial of responsibility! Vigour Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment
Enable Notifications    OK No thanks