At the beginning of the month, the 30-year mortgage interest rate was as high as 7.16%, but now it has suddenly dropped to 6.61%. Has the real estate crisis in the United States been alleviated?

Will the subprime mortgage crisis of 2008 happen again?

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Previously, when the 30-year mortgage interest rate broke through 7%, Wall Street investment banks predicted one after another that house prices in the United States would fall by at least 20%, and there is no exclusion of the risk of a similar subprime mortgage crisis as in those years.

In the view of experts, the current house prices in the United States have not shown a significant decline, but the high house prices and high interest rates have led to fewer and fewer people buying houses.

Moreover, under inflation, the normal expenditure of ordinary families has been squeezed, and no one is willing to bear the increasingly heavy pressure of mortgage loans in this situation, so the number of people buying houses tends to decrease.

Official data from the United States shows that in recent weeks, the number of new loan applications has been decreasing month by month, and the transaction volume of second-hand houses has decreased by 30% compared with the same period last year.

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Recently, Fannie Mae also conducted a survey on the housing market, showing that Americans are very pessimistic about the future trend of house prices. Less than 20% of consumers believe that it is the right time to buy a house, and this data is the lowest level since 2011.

At the same time, respondents believe that it is not a good time to sell houses now, because the transaction volume of second-hand houses is decreasing, and houses are becoming more and more difficult to sell.

Fannie Mae divided the survey into several categories and finally calculated the housing sentiment index. Currently, the index has recorded a continuous decline for 8 months this year, which is also the lowest level since 2011.Whether it's experts or ordinary consumers, there is a consensus that the Federal Reserve's continuous interest rate hikes, leading to a constant increase in mortgage interest rates, is the biggest reason for the potential future implosion of the real estate market.

Even the average American still vividly remembers how the subprime mortgage crisis erupted over a decade ago.

In early November, the 30-year mortgage interest rate rose to 7.16%, which is already higher than the highest level before the 2008 financial crisis and even the highest level since 2001.

Now, although the mortgage interest rate has fallen somewhat, the Federal Reserve is still expected to raise rates by at least 50 basis points in December, and next year it will push the interest rate above 5%. This means that mortgage interest rates will continue to rise.

The subprime mortgage crisis occurred because the continuous increase in mortgage interest rates led to growing repayment pressure. Many homebuyers who had applied for subprime loans were unable to repay their loans and had to abandon their homes.

Due to the leverage effect in the real estate market, coupled with the leverage effect in the financial market, the situation became uncontrollable, leading to the global subprime mortgage crisis.

According to current industry analysts' predictions, the Federal Reserve's final interest rate level will be higher than 5%. This means that at least an additional 125 basis points of interest rate hikes are needed on the current basis, which also implies that mortgage interest rates may increase by 1.5 to 2 percentage points on the current basis.

As mortgage interest rates gradually rise from 7% to 8.5%, or even 9% in the future, a greater crisis will emerge. An increasing number of ordinary families will be pushed beyond their last psychological defense line and ultimately choose to stop making mortgage payments and default on their loans.For officials at the Federal Reserve, it is not that they are unaware of the impact of continuous interest rate hikes on the real estate market. On the contrary, some Federal Reserve officials believe that the decline in housing prices caused by continuous interest rate hikes is more conducive to controlling inflation. In their view, the decline in housing prices is not a danger but an opportunity for inflation to continue to decline.

It is no wonder that former Federal Reserve Chairman Powell once stated that in order to control inflation, he was willing to pay an economic price. It seems that the Federal Reserve has no intention of letting go of housing prices, and only by finding ways to reduce housing prices can inflation truly be reduced.

However, the problem is that this economic cost is paid by ordinary American families in the form of a significant devaluation of housing prices and a substantial reduction in net assets.