Gov’t to target 4.5% for mortgages

[donaldduckmoore]

But is maintaining at 4.5% technically feasible? and for how long?

[Arraya]

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.

This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.

By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.

How long do ya think till they comeback?

The only buyer is the USG now.

[Arraya]

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.

This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.

By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.

How long do ya think till they comeback?

The only buyer is the USG now.

[Arraya]

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.

This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.

By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.

How long do ya think till they comeback?

The only buyer is the USG now.

[Arraya]

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.

This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.

By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.

How long do ya think till they comeback?

The only buyer is the USG now.

[Arraya]

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.

This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.

By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.

How long do ya think till they comeback?

The only buyer is the USG now.

[(former)FormerSanDiegan]

[quote=BGinRB][quote=FormerSanDiegan]
I am having a hard time figuring out why the prudent saver who is looking for a house for his/her family to live in is not being rewarded. [/quote]

Here, I’ll help you figure it out – plot price-to-income in 2000 vs 2008 for 92126-92131.

[/quote]

I would prefer that you bring the data to support your argument. I cannot find income broken down by zip code
However, here’s my stab at finding data related to your argument. I’ll take median prices averaged over 3 months(to reduce month-to-month noise) for 92126.

92126 Median prices:
Aug-Oct 2008 : Three month average of median price is 377K.

Aug-Oct 2000 : Three month average of median price is 236K.

About a 60% increase in prices.

I only have Census bureau income from 2000 and 2006. From 2000-2006 San Diego median family income rose by 34% .

So, since 2000 Prices in the first zip code you mentioned have risen about 60% compared to incomes at ~34%.

However, interest rates in 2000 were at 7.25% for 30-year fixed. Currently at 5.5%, a decline of about 25%

Guess what this means ?

We’re fairly close to the same percentage of income required to buy as was the case in 2000.

If we assume a 2% percent income growth that we didn’t account for in 2007-2008 and another 5% decline in prices since October, guess what ? We are at that point.

If you compare to 2005, you will find that owning in that zip code as a percentage of income is about half today (compared to 2005 peak).

We are very likely to see more downside in prices. However, I would not characterize the current situation as being unfavorable to the prudent savers who have been out of the RE market.

[(former)FormerSanDiegan]

[quote=BGinRB][quote=FormerSanDiegan]
I am having a hard time figuring out why the prudent saver who is looking for a house for his/her family to live in is not being rewarded. [/quote]

Here, I’ll help you figure it out – plot price-to-income in 2000 vs 2008 for 92126-92131.

[/quote]

I would prefer that you bring the data to support your argument. I cannot find income broken down by zip code
However, here’s my stab at finding data related to your argument. I’ll take median prices averaged over 3 months(to reduce month-to-month noise) for 92126.

92126 Median prices:
Aug-Oct 2008 : Three month average of median price is 377K.

Aug-Oct 2000 : Three month average of median price is 236K.

About a 60% increase in prices.

I only have Census bureau income from 2000 and 2006. From 2000-2006 San Diego median family income rose by 34% .

So, since 2000 Prices in the first zip code you mentioned have risen about 60% compared to incomes at ~34%.

However, interest rates in 2000 were at 7.25% for 30-year fixed. Currently at 5.5%, a decline of about 25%

Guess what this means ?

We’re fairly close to the same percentage of income required to buy as was the case in 2000.

If we assume a 2% percent income growth that we didn’t account for in 2007-2008 and another 5% decline in prices since October, guess what ? We are at that point.

If you compare to 2005, you will find that owning in that zip code as a percentage of income is about half today (compared to 2005 peak).

We are very likely to see more downside in prices. However, I would not characterize the current situation as being unfavorable to the prudent savers who have been out of the RE market.

[(former)FormerSanDiegan]

[quote=BGinRB][quote=FormerSanDiegan]
I am having a hard time figuring out why the prudent saver who is looking for a house for his/her family to live in is not being rewarded. [/quote]

Here, I’ll help you figure it out – plot price-to-income in 2000 vs 2008 for 92126-92131.

[/quote]

I would prefer that you bring the data to support your argument. I cannot find income broken down by zip code
However, here’s my stab at finding data related to your argument. I’ll take median prices averaged over 3 months(to reduce month-to-month noise) for 92126.

92126 Median prices:
Aug-Oct 2008 : Three month average of median price is 377K.

Aug-Oct 2000 : Three month average of median price is 236K.

About a 60% increase in prices.

I only have Census bureau income from 2000 and 2006. From 2000-2006 San Diego median family income rose by 34% .

So, since 2000 Prices in the first zip code you mentioned have risen about 60% compared to incomes at ~34%.

However, interest rates in 2000 were at 7.25% for 30-year fixed. Currently at 5.5%, a decline of about 25%

Guess what this means ?

We’re fairly close to the same percentage of income required to buy as was the case in 2000.

If we assume a 2% percent income growth that we didn’t account for in 2007-2008 and another 5% decline in prices since October, guess what ? We are at that point.

If you compare to 2005, you will find that owning in that zip code as a percentage of income is about half today (compared to 2005 peak).

We are very likely to see more downside in prices. However, I would not characterize the current situation as being unfavorable to the prudent savers who have been out of the RE market.

[(former)FormerSanDiegan]

[quote=BGinRB][quote=FormerSanDiegan]
I am having a hard time figuring out why the prudent saver who is looking for a house for his/her family to live in is not being rewarded. [/quote]

Here, I’ll help you figure it out – plot price-to-income in 2000 vs 2008 for 92126-92131.

[/quote]

I would prefer that you bring the data to support your argument. I cannot find income broken down by zip code
However, here’s my stab at finding data related to your argument. I’ll take median prices averaged over 3 months(to reduce month-to-month noise) for 92126.

92126 Median prices:
Aug-Oct 2008 : Three month average of median price is 377K.

Aug-Oct 2000 : Three month average of median price is 236K.

About a 60% increase in prices.

I only have Census bureau income from 2000 and 2006. From 2000-2006 San Diego median family income rose by 34% .

So, since 2000 Prices in the first zip code you mentioned have risen about 60% compared to incomes at ~34%.

However, interest rates in 2000 were at 7.25% for 30-year fixed. Currently at 5.5%, a decline of about 25%

Guess what this means ?

We’re fairly close to the same percentage of income required to buy as was the case in 2000.

If we assume a 2% percent income growth that we didn’t account for in 2007-2008 and another 5% decline in prices since October, guess what ? We are at that point.

If you compare to 2005, you will find that owning in that zip code as a percentage of income is about half today (compared to 2005 peak).

We are very likely to see more downside in prices. However, I would not characterize the current situation as being unfavorable to the prudent savers who have been out of the RE market.

[(former)FormerSanDiegan]

[quote=BGinRB][quote=FormerSanDiegan]
I am having a hard time figuring out why the prudent saver who is looking for a house for his/her family to live in is not being rewarded. [/quote]

Here, I’ll help you figure it out – plot price-to-income in 2000 vs 2008 for 92126-92131.

[/quote]

I would prefer that you bring the data to support your argument. I cannot find income broken down by zip code
However, here’s my stab at finding data related to your argument. I’ll take median prices averaged over 3 months(to reduce month-to-month noise) for 92126.

92126 Median prices:
Aug-Oct 2008 : Three month average of median price is 377K.

Aug-Oct 2000 : Three month average of median price is 236K.

About a 60% increase in prices.

I only have Census bureau income from 2000 and 2006. From 2000-2006 San Diego median family income rose by 34% .

So, since 2000 Prices in the first zip code you mentioned have risen about 60% compared to incomes at ~34%.

However, interest rates in 2000 were at 7.25% for 30-year fixed. Currently at 5.5%, a decline of about 25%

Guess what this means ?

We’re fairly close to the same percentage of income required to buy as was the case in 2000.

If we assume a 2% percent income growth that we didn’t account for in 2007-2008 and another 5% decline in prices since October, guess what ? We are at that point.

If you compare to 2005, you will find that owning in that zip code as a percentage of income is about half today (compared to 2005 peak).

We are very likely to see more downside in prices. However, I would not characterize the current situation as being unfavorable to the prudent savers who have been out of the RE market.

[sdrealtor]

4.5% mortgages would get the economy humming of they were available for everyone which I believe they will be. Take your 150K HH with 500K of mortgage debt at 6.5%, lower that to 4.5% and those Gen Xers will have $10K of discretionary consumption minded income to spend on Plasmas, Escalades and iPods. Put those mortgages in the hands of the right borrowers and there will be buyers for them.

[sdrealtor]

4.5% mortgages would get the economy humming of they were available for everyone which I believe they will be. Take your 150K HH with 500K of mortgage debt at 6.5%, lower that to 4.5% and those Gen Xers will have $10K of discretionary consumption minded income to spend on Plasmas, Escalades and iPods. Put those mortgages in the hands of the right borrowers and there will be buyers for them.

[sdrealtor]

4.5% mortgages would get the economy humming of they were available for everyone which I believe they will be. Take your 150K HH with 500K of mortgage debt at 6.5%, lower that to 4.5% and those Gen Xers will have $10K of discretionary consumption minded income to spend on Plasmas, Escalades and iPods. Put those mortgages in the hands of the right borrowers and there will be buyers for them.

[sdrealtor]

4.5% mortgages would get the economy humming of they were available for everyone which I believe they will be. Take your 150K HH with 500K of mortgage debt at 6.5%, lower that to 4.5% and those Gen Xers will have $10K of discretionary consumption minded income to spend on Plasmas, Escalades and iPods. Put those mortgages in the hands of the right borrowers and there will be buyers for them.

[Author]

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