90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
They can slowly tighten the noose, but it’s not like a few years ago. If you don’t qualify for a 5% prime loan, there is no more subprime market at 7%. You either qualify or you don’t.
Loans arent originated by banks who then go looking for a buyer.
The loans are locked daily and delivered to FNMA asap, who then package them into MBS. Banks don’t originate 30 mtgs and then hope that they can sell them at a profit. Nobody can afford to gamble on rates falling so they can receive a premium. Loan locks are a serious part of the business that people don’t realize.
If a % of locked loans are not delivered, there is a price to pay.
The CDO crap that was sold by Wall Street investment banks was not 15/30 YR mortgages to prime borrowers. It was (worthless) subprime ARM crap often rated AAA by ratings agencies who were paid fees to rate the bonds.
The fraud and incompetence at the highest levels resulted in billions of dollars of taxpayer bailout money that rewarded the incompetent who gambled with OPM. People who should be in jail today are collecting fat salaries today with no consequences except to stockholders who have lost large portions of their retirement accounts.
Imagine what would happen to the national market if 20% down was the ONLY way to buy a house.
Imagine if 50% down was the ONLY way to buy a house. What if there was no financing available for houses at all ? Prices would be a fraction of what they are today.
Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
DW, I don’t recommend auto loans for than a year or two. Save up and pay cash instead of buying now and financing. Drive a clunker with no debt.
