Home › Forums › Financial Markets/Economics › Get ready for even lower interest rates….
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an.
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July 21, 2010 at 5:42 PM #581992July 21, 2010 at 5:43 PM #580965
bearishgurl
ParticipantI meant to add, “no points,” of course!
July 21, 2010 at 5:43 PM #581057ParticipantI meant to add, “no points,” of course!
July 21, 2010 at 5:43 PM #581588ParticipantI meant to add, “no points,” of course!
July 21, 2010 at 5:43 PM #581694ParticipantI meant to add, “no points,” of course!
July 21, 2010 at 5:43 PM #581997ParticipantI meant to add, “no points,” of course!
July 21, 2010 at 5:49 PM #580975Participant[quote=Scarlett]B of A CDs rate is 0.4% for 9 months risk free, and 0.8% for 1 yr HIGH YIELD (is that a joke?!)
I didn’t even know that you COULD have less than 1% returns on a CD – they should be embarassed. I’d rather keep my money in a safe at home.[/quote]
Scarlett, I have a “Spring Air Four Seasons” double-pillowtop mattress. Maybe I just can sew in some “currency envelopes” in it. Seems like the safest remedy for savings, don’t you think??
July 21, 2010 at 5:49 PM #581067Participant[quote=Scarlett]B of A CDs rate is 0.4% for 9 months risk free, and 0.8% for 1 yr HIGH YIELD (is that a joke?!)
I didn’t even know that you COULD have less than 1% returns on a CD – they should be embarassed. I’d rather keep my money in a safe at home.[/quote]
Scarlett, I have a “Spring Air Four Seasons” double-pillowtop mattress. Maybe I just can sew in some “currency envelopes” in it. Seems like the safest remedy for savings, don’t you think??
July 21, 2010 at 5:49 PM #581598Participant[quote=Scarlett]B of A CDs rate is 0.4% for 9 months risk free, and 0.8% for 1 yr HIGH YIELD (is that a joke?!)
I didn’t even know that you COULD have less than 1% returns on a CD – they should be embarassed. I’d rather keep my money in a safe at home.[/quote]
Scarlett, I have a “Spring Air Four Seasons” double-pillowtop mattress. Maybe I just can sew in some “currency envelopes” in it. Seems like the safest remedy for savings, don’t you think??
July 21, 2010 at 5:49 PM #581704Participant[quote=Scarlett]B of A CDs rate is 0.4% for 9 months risk free, and 0.8% for 1 yr HIGH YIELD (is that a joke?!)
I didn’t even know that you COULD have less than 1% returns on a CD – they should be embarassed. I’d rather keep my money in a safe at home.[/quote]
Scarlett, I have a “Spring Air Four Seasons” double-pillowtop mattress. Maybe I just can sew in some “currency envelopes” in it. Seems like the safest remedy for savings, don’t you think??
July 21, 2010 at 5:49 PM #582007Participant[quote=Scarlett]B of A CDs rate is 0.4% for 9 months risk free, and 0.8% for 1 yr HIGH YIELD (is that a joke?!)
I didn’t even know that you COULD have less than 1% returns on a CD – they should be embarassed. I’d rather keep my money in a safe at home.[/quote]
Scarlett, I have a “Spring Air Four Seasons” double-pillowtop mattress. Maybe I just can sew in some “currency envelopes” in it. Seems like the safest remedy for savings, don’t you think??
July 21, 2010 at 7:24 PM #581000CA renter
Participant[quote=flu]
Well, I’m just curious, forgetting the down payment, what if rates are so low, that monthly payments on a 30 or 15 year fixed are actually as low or lower than your typical rent prices? I think that would bring out some sideline folks…[/quote]
The rates have been so low for awhile that the P&I payments are often pretty close to rent (even in our “bullet-proof” neighborhoods). The problem is the property taxes. At these prices, the property taxes are so high, that they negate the “benefit” of lower rates, IMHO. The entire reason we’re not buying is because of the property taxes, not interest rates. Also, when the assessments can go up 2% each year under Prop 13, that 2% is a much bigger number at $800K than at $300K, so your monthly increase each year is greater at the higher price than at the lower price, and it has a compounding effect.
I honestly think we’re at a point where interest rates will simply encourage refinancing, not necessarily encourage more purchases. The next form of savings for buyers has to come from a lower price and lower property taxes.
[quote]The next thing though, is what about down payment? Well, what if that was somehow subsidized? Seems like a win win win situation to me for fed/state/banks at the expense of the rest of the folks paying for such subsidies.
Just saying, because at this current situation, I really am starting to think anything is possible…..
And I guess folks that’s been waiting since 2004/5 are going to be a little more peeved….(Sorry…I’m just the messenger…)[/quote]They’ve already been subsidizing down payments. With the FHA’s 3.5% down payment requirements, the $8,000 credit was the full down payment required for a $228K house. Is it any wonder that inventory priced under that level essentially disappeared this past year? As you probably know, this leverage works all the way up through the higher-end homes. Even with 20% down, the $8,000 tax credit increases what a buyer can pay for a place by $40,000. If a mid-tier buyer is using FHA, though, it is still a $228K increase in spending power (usually reflected in higher prices which benefit sellers; it’s not a better deal for the buyers, IMHO).
Match that with the 6% “seller’s concessions” that are perfectly legal(!!!), and buyers are essentially BEING PAID to buy a house. I do believe they’re trying to reduce the allowed concessions to 3% of the purchase price, but don’t know if that’s official yet. Still, lots of things are going on behind the scenes that are totally insane.
July 21, 2010 at 7:24 PM #581092Participant[quote=flu]
Well, I’m just curious, forgetting the down payment, what if rates are so low, that monthly payments on a 30 or 15 year fixed are actually as low or lower than your typical rent prices? I think that would bring out some sideline folks…[/quote]
The rates have been so low for awhile that the P&I payments are often pretty close to rent (even in our “bullet-proof” neighborhoods). The problem is the property taxes. At these prices, the property taxes are so high, that they negate the “benefit” of lower rates, IMHO. The entire reason we’re not buying is because of the property taxes, not interest rates. Also, when the assessments can go up 2% each year under Prop 13, that 2% is a much bigger number at $800K than at $300K, so your monthly increase each year is greater at the higher price than at the lower price, and it has a compounding effect.
I honestly think we’re at a point where interest rates will simply encourage refinancing, not necessarily encourage more purchases. The next form of savings for buyers has to come from a lower price and lower property taxes.
[quote]The next thing though, is what about down payment? Well, what if that was somehow subsidized? Seems like a win win win situation to me for fed/state/banks at the expense of the rest of the folks paying for such subsidies.
Just saying, because at this current situation, I really am starting to think anything is possible…..
And I guess folks that’s been waiting since 2004/5 are going to be a little more peeved….(Sorry…I’m just the messenger…)[/quote]They’ve already been subsidizing down payments. With the FHA’s 3.5% down payment requirements, the $8,000 credit was the full down payment required for a $228K house. Is it any wonder that inventory priced under that level essentially disappeared this past year? As you probably know, this leverage works all the way up through the higher-end homes. Even with 20% down, the $8,000 tax credit increases what a buyer can pay for a place by $40,000. If a mid-tier buyer is using FHA, though, it is still a $228K increase in spending power (usually reflected in higher prices which benefit sellers; it’s not a better deal for the buyers, IMHO).
Match that with the 6% “seller’s concessions” that are perfectly legal(!!!), and buyers are essentially BEING PAID to buy a house. I do believe they’re trying to reduce the allowed concessions to 3% of the purchase price, but don’t know if that’s official yet. Still, lots of things are going on behind the scenes that are totally insane.
July 21, 2010 at 7:24 PM #581623Participant[quote=flu]
Well, I’m just curious, forgetting the down payment, what if rates are so low, that monthly payments on a 30 or 15 year fixed are actually as low or lower than your typical rent prices? I think that would bring out some sideline folks…[/quote]
The rates have been so low for awhile that the P&I payments are often pretty close to rent (even in our “bullet-proof” neighborhoods). The problem is the property taxes. At these prices, the property taxes are so high, that they negate the “benefit” of lower rates, IMHO. The entire reason we’re not buying is because of the property taxes, not interest rates. Also, when the assessments can go up 2% each year under Prop 13, that 2% is a much bigger number at $800K than at $300K, so your monthly increase each year is greater at the higher price than at the lower price, and it has a compounding effect.
I honestly think we’re at a point where interest rates will simply encourage refinancing, not necessarily encourage more purchases. The next form of savings for buyers has to come from a lower price and lower property taxes.
[quote]The next thing though, is what about down payment? Well, what if that was somehow subsidized? Seems like a win win win situation to me for fed/state/banks at the expense of the rest of the folks paying for such subsidies.
Just saying, because at this current situation, I really am starting to think anything is possible…..
And I guess folks that’s been waiting since 2004/5 are going to be a little more peeved….(Sorry…I’m just the messenger…)[/quote]They’ve already been subsidizing down payments. With the FHA’s 3.5% down payment requirements, the $8,000 credit was the full down payment required for a $228K house. Is it any wonder that inventory priced under that level essentially disappeared this past year? As you probably know, this leverage works all the way up through the higher-end homes. Even with 20% down, the $8,000 tax credit increases what a buyer can pay for a place by $40,000. If a mid-tier buyer is using FHA, though, it is still a $228K increase in spending power (usually reflected in higher prices which benefit sellers; it’s not a better deal for the buyers, IMHO).
Match that with the 6% “seller’s concessions” that are perfectly legal(!!!), and buyers are essentially BEING PAID to buy a house. I do believe they’re trying to reduce the allowed concessions to 3% of the purchase price, but don’t know if that’s official yet. Still, lots of things are going on behind the scenes that are totally insane.
July 21, 2010 at 7:24 PM #581729Participant[quote=flu]
Well, I’m just curious, forgetting the down payment, what if rates are so low, that monthly payments on a 30 or 15 year fixed are actually as low or lower than your typical rent prices? I think that would bring out some sideline folks…[/quote]
The rates have been so low for awhile that the P&I payments are often pretty close to rent (even in our “bullet-proof” neighborhoods). The problem is the property taxes. At these prices, the property taxes are so high, that they negate the “benefit” of lower rates, IMHO. The entire reason we’re not buying is because of the property taxes, not interest rates. Also, when the assessments can go up 2% each year under Prop 13, that 2% is a much bigger number at $800K than at $300K, so your monthly increase each year is greater at the higher price than at the lower price, and it has a compounding effect.
I honestly think we’re at a point where interest rates will simply encourage refinancing, not necessarily encourage more purchases. The next form of savings for buyers has to come from a lower price and lower property taxes.
[quote]The next thing though, is what about down payment? Well, what if that was somehow subsidized? Seems like a win win win situation to me for fed/state/banks at the expense of the rest of the folks paying for such subsidies.
Just saying, because at this current situation, I really am starting to think anything is possible…..
And I guess folks that’s been waiting since 2004/5 are going to be a little more peeved….(Sorry…I’m just the messenger…)[/quote]They’ve already been subsidizing down payments. With the FHA’s 3.5% down payment requirements, the $8,000 credit was the full down payment required for a $228K house. Is it any wonder that inventory priced under that level essentially disappeared this past year? As you probably know, this leverage works all the way up through the higher-end homes. Even with 20% down, the $8,000 tax credit increases what a buyer can pay for a place by $40,000. If a mid-tier buyer is using FHA, though, it is still a $228K increase in spending power (usually reflected in higher prices which benefit sellers; it’s not a better deal for the buyers, IMHO).
Match that with the 6% “seller’s concessions” that are perfectly legal(!!!), and buyers are essentially BEING PAID to buy a house. I do believe they’re trying to reduce the allowed concessions to 3% of the purchase price, but don’t know if that’s official yet. Still, lots of things are going on behind the scenes that are totally insane.
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