4% 30 Year Mortgage

[trex]

How long until it matters? Tons of cash chasing deals out there.

[Coronita]

10/1 rates are low.

[an]

Didn’t stop the price increase in the 70s.

[The-Shoveler]

I remember my friend paying extra points to get an 11% fixed rate in the 80’s.

Housing was still going nuts in LA at that time, but there was a crazy amount of defense spending the cold war was on full steam.

[spdrun]

10/1 rates are low.

Now that would be fun to watch … investors taking ARMs now, then being forced into shortsale when they re-adjust.

[spdrun]

Didn’t stop the price increase in the 70s.

Rates were mostly 7-9% until 1979-80, when they shot up to 11%.

Under 3% to over 5% represents a bigger % variance than existed through much of the 70s.

[The-Shoveler]

One more coincidence or similarity to current times is the boomers were just hitting their 30’s. but come 89-early 90’s in LA at least when the cold war was winding down things went south fairly quickly. Took almost to 97-99 before the next bubble got really going and housing (in LA) to really recover.

[sdrealtor]

[quote=The-Shoveler]One more coincidence or similarity to current times is the boomers were just hitting their 30’s. but come 89-early 90’s in LA at least when the cold war was winding down things went south fairly quickly. Took almost to 97-99 before the next bubble got really going and housing (in LA) to really recover.[/quote]

I remember how rough things were in early 90s around here. I went back to grad school and then moved back east for a couple years to finish those degrees. Very fortunate to have come back in 97 ready to buy my first home. I’ve made many very smart decisions along the way but they were all made possible by the luck of that game changing timing that created the opportunity of a lifetime for me that I recognized and jumped at

[barnaby33]

Rates bottomed around 2.75% for a 30 year fixed? If so the move to 4% is massive in terms of % increase. Given how much greater our entire economy (not just housing) is levered to interest rates, I’ll be shocked if this doesn’t blunt to top appreciation.
Josh

[sdrealtor]

Im below 2.75% so I guess I beat it again:)

Again people keep missing the point Ive been trying to make. When rates were that low the lenders didnt offer anything but 30 yr and if hybrid adjustable (10/1, 7/1. 5/1) the rate was not all that different. We have all gotten used to only 30 yr rates.

Youve all forgotten about those hybrid products. When I bought my home in 1999 it was with a 5/1 ARM at 7.125%. Virtually no one keeps a loan for 30 years and few are still in place 10 years later. We are going to see the 10/1 and 7/1 come roaring back into favor very quickly. Its what the market always does when rates are no longer falling. Mark my words this market has more legs than you think. Im not saying more 20%+ years but we arent done going up and we are not falling appreciably anytime in the next few years. Feel free to bookmark this post. This will be yet another prediction I’ll be proven right on

[XBoxBoy]

[quote=sdrealtor]Virtually no one keeps a loan for 30 years and few are still in place 10 years later.[/quote]

I would bet that the percentage of people keeping their 30 year loans more than 10 years will increase in the coming decades. A lot of people with really low rates ain’t going no where, and probably won’t get a good opportunity to refinance. Just a hunch.

[sdrealtor]

I agree that more will but as they say life gets in the way for a lot of us

[Coronita]

[quote=XBoxBoy][quote=sdrealtor]Virtually no one keeps a loan for 30 years and few are still in place 10 years later.[/quote]

I would bet that the percentage of people keeping their 30 year loans more than 10 years will increase in the coming decades. A lot of people with really low rates ain’t going no where, and probably won’t get a good opportunity to refinance. Just a hunch.[/quote]

I think with low 30 year interest rates locked in 3% and below, that’s below where people say a 4% decent investment is. So yes, I’d think some folks even will eventually be a landlord even if they wanted to move elsewhere. New buyers however, I can seem getting 10/1 arms.

[The-Shoveler]

There are probably going to be a lot of new mortgage products.

50 – 70 – 100 year mortgages
interest only
Maybe equity sharing.

Who knows, the issue this time is we are not overbuilt so a big housing crash is unlikely IMO.

[pencilneck]

Hypothetical:

Two contrasting rates and expectations:

30 year @ 2.75% – inflation at 2% annualized with long term expectations in the 2-3% range.

30 year @ 4% – inflation at 7% annualized with long term expectations in the 3-7% range.

Isn’t the second loan less expensive than the first?

[Author]

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