>1% interest SPIKE = 10% house price drop?

[an]

[quote=Doooh]Your examples were based on years of change. The reality of the current example we’re in was based on 1 month. Let me repeat it again… 1 month and the 30 year saw a 1% increase!

The examples you presented are irrelevant to the reality we’re sitting in this month.[/quote]
There were several times in 2009 that rates went up by about .5% w/in 1 month, yet, we didn’t see a drop of 5% in home price. On the contrary, it was a steady rise throughout 2009. In 2008, there were a couple of periods where rates went down by about .5% w/in 1 month, yet, we didn’t see an increase of 5% in home price. Are you saying 1% is somehow the threshold?

[Doooh]

2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.

[Doooh]

2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.

[Doooh]

2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.

[Doooh]

2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.

[Doooh]

2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.

[an]

[quote=Doooh]2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.[/quote]
Are you sure about that? IO/NegAm stuff were big around 2005-2006, but 2008/2009? I remember 2008-2009, people were talking about the ARM tsunami. Why would there be a tsunami if IO/NegAm was still widespread? If you think this 1% rise will make a big difference, lets just wait another 3 months and see if it will or not.

[an]

[quote=Doooh]2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.[/quote]
Are you sure about that? IO/NegAm stuff were big around 2005-2006, but 2008/2009? I remember 2008-2009, people were talking about the ARM tsunami. Why would there be a tsunami if IO/NegAm was still widespread? If you think this 1% rise will make a big difference, lets just wait another 3 months and see if it will or not.

[an]

[quote=Doooh]2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.[/quote]
Are you sure about that? IO/NegAm stuff were big around 2005-2006, but 2008/2009? I remember 2008-2009, people were talking about the ARM tsunami. Why would there be a tsunami if IO/NegAm was still widespread? If you think this 1% rise will make a big difference, lets just wait another 3 months and see if it will or not.

[an]

[quote=Doooh]2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.[/quote]
Are you sure about that? IO/NegAm stuff were big around 2005-2006, but 2008/2009? I remember 2008-2009, people were talking about the ARM tsunami. Why would there be a tsunami if IO/NegAm was still widespread? If you think this 1% rise will make a big difference, lets just wait another 3 months and see if it will or not.

[an]

[quote=Doooh]2008 and 2009 were some the years of exotic financing. If the interest rate increase there was a new way to finance right around the corner, ie 105% financing or interest only or Neg Am or….

I’m not a Mortgage finance guy, but I think those days are behind us. The typical ways to get easy money in the form of a mortgage are gone. Cold hard downpayment are the norm again. Interest rates matter a lot more in today environment.[/quote]
Are you sure about that? IO/NegAm stuff were big around 2005-2006, but 2008/2009? I remember 2008-2009, people were talking about the ARM tsunami. Why would there be a tsunami if IO/NegAm was still widespread? If you think this 1% rise will make a big difference, lets just wait another 3 months and see if it will or not.

[(former)FormerSanDiegan]

[quote=doofrat]
If you go from 4% to 8%, that’s 100%, so your payment effectively doubles.
At least that’s what I figured out, if I’m wrong, feel free to flame me.[/quote]

Not exactly…
There is a non-linear relationship between interest rate and payment. Although the interest portion would double, the monthly payment does not.
30-year loan:
400K @ 4% -> 1909.56 P&I
400K @ 5% -> 2147.29
400K @ 8% -> 2935.06 P&I

In this case, a 25% increase in rate yields a 12% increase in payment and a 100% increase in interest rate corresponds to a 53.7% increase in monthly payment.

[(former)FormerSanDiegan]

[quote=doofrat]
If you go from 4% to 8%, that’s 100%, so your payment effectively doubles.
At least that’s what I figured out, if I’m wrong, feel free to flame me.[/quote]

Not exactly…
There is a non-linear relationship between interest rate and payment. Although the interest portion would double, the monthly payment does not.
30-year loan:
400K @ 4% -> 1909.56 P&I
400K @ 5% -> 2147.29
400K @ 8% -> 2935.06 P&I

In this case, a 25% increase in rate yields a 12% increase in payment and a 100% increase in interest rate corresponds to a 53.7% increase in monthly payment.

[(former)FormerSanDiegan]

[quote=doofrat]
If you go from 4% to 8%, that’s 100%, so your payment effectively doubles.
At least that’s what I figured out, if I’m wrong, feel free to flame me.[/quote]

Not exactly…
There is a non-linear relationship between interest rate and payment. Although the interest portion would double, the monthly payment does not.
30-year loan:
400K @ 4% -> 1909.56 P&I
400K @ 5% -> 2147.29
400K @ 8% -> 2935.06 P&I

In this case, a 25% increase in rate yields a 12% increase in payment and a 100% increase in interest rate corresponds to a 53.7% increase in monthly payment.

[(former)FormerSanDiegan]

[quote=doofrat]
If you go from 4% to 8%, that’s 100%, so your payment effectively doubles.
At least that’s what I figured out, if I’m wrong, feel free to flame me.[/quote]

Not exactly…
There is a non-linear relationship between interest rate and payment. Although the interest portion would double, the monthly payment does not.
30-year loan:
400K @ 4% -> 1909.56 P&I
400K @ 5% -> 2147.29
400K @ 8% -> 2935.06 P&I

In this case, a 25% increase in rate yields a 12% increase in payment and a 100% increase in interest rate corresponds to a 53.7% increase in monthly payment.

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