Goldman sees a housing freeze through 2027. It would lock in an economic divide between millennials
Source: Fortune ·
Generation Refi and Generation Rent are pulling away as 3% and 7% carry massive implications. It's the locked-in and the locked-out.
From the source
More than 95% of American mortgage borrowers pay less than today’s market rate, and 65% pay at least 2 percentage points less, a legacy of the mass refinancing of 2020 and 2021, when rates hit record lows. In a note published Monday, Goldman Sachs economists say that gap will keep the housing market stuck through 2027, with just 3.9 million existing-home sales, 26% below 2019 levels. The note does not mention millennials, but its findings bear on the split inside that generation. The main reason for the diagnosis by Goldman economist Ronnie Walker is “lock-in.” Moving would mean giving up a cheap loan for an expensive one. Goldman’s strategists expect mortgage rates to fall to 6.4% by the end of 2027. Even so, the note says affordability will stay at historically poor levels. Rates have climbed another 140 basis points since their February trough, to roughly 7.4%. That pushes even more borrowers below the market rate and raises the bar for anyone who still needs a loan. Two…