Higher mortgage rates can be a good thing for buyers…

[Bob]

For those of you who are worried about higher interest rates in the coming months and years, don’t worry, higher rates can be a good thing. Let me explain….

Currently, what we have going on at the Federal level is one of the most anti capitalistic administrations in modern history – combined with an academic interventionist chairman of the federal reserve who isn’t much better. Their goal is to artificially inflate housing prices using three primary tools.

1) Record low mortgage rates.

2) Loan modifications and moratoriums.

3) FHA loans to as many as possible, including “marginally” qualified applicants.

If any one of the above three tools gets derailed, it throws the plan off track and puts further downward pressure on real estate prices. Thats why yesterday’s rate spikes brought such negative drama to Wall St. and D.C…. Wall St. (as well as the feds) were scared silly that weak demand for US securities, combined with worries about inflation, would lead to higher interest rates and a continued deterioration of the housing sector.

Here’s the point….at some time in the not too distant future Ben Bernanke won’t be able to control the events that have kept mortgage rates artificially low. When that day comes, (and trust me, its coming) rates will go up significantly due to market forces. Higher rates will choke the housing recovery. In fact, in just the past week new loan originations were way down due to a small uptick in interest rates. Just imagine what will happen when rates go up significantly ? I’ll tell you what will happen…..demand will be reduced significantly and supply will increase, which will eventually lead to further price drops.

So here’s my prediction…during the coming summer months prices will remain stable, (or go up slightly) at the low end. But come this fall and winter, prices will once again DROP from current levels…perhaps as much as 5%-10% at the low end, and more at the mid/upper ranges throughout San Diego County. Why ? Because the combination of higher interest rates, higher unemployment rates, increased foreclosures, and the end of the spring/summer buying season will create a significant slowdown.

[an]

How high will rates go up to this Winter? Any prediction for the next 5 years?

[an]

How high will rates go up to this Winter? Any prediction for the next 5 years?

[an]

How high will rates go up to this Winter? Any prediction for the next 5 years?

[an]

How high will rates go up to this Winter? Any prediction for the next 5 years?

[an]

How high will rates go up to this Winter? Any prediction for the next 5 years?

[Bob]

[quote=AN]How high will rates go up to this Winter? Any prediction for the next 5 years?[/quote]

To get a better indication of when and how high rates will go, look at two things. 1)The continued purchase of securities by the Feds. 2) The general improvement in the economy.

If the Feds announce this summer that they are ending the purchasing of securities, mortgage rates could very well spike a full percentage point by the next day. Ironically, if the economy shows improvement later this summer, that will have a negative effect on the bond market as well, resulting in higher rates. And then there is the “inflation factor” to calculate.

I won’t make a guess as to what the actual rate will be next winter, but I wouldn’t be shocked to see it at around 6.5%-7% for a 30 yr. fixed. And only God knows what the rates will be in five years, but one thing I can say, if market forces are allowed to once again take over, interest rates will be much higher across the board.

[Bob]

[quote=AN]How high will rates go up to this Winter? Any prediction for the next 5 years?[/quote]

To get a better indication of when and how high rates will go, look at two things. 1)The continued purchase of securities by the Feds. 2) The general improvement in the economy.

If the Feds announce this summer that they are ending the purchasing of securities, mortgage rates could very well spike a full percentage point by the next day. Ironically, if the economy shows improvement later this summer, that will have a negative effect on the bond market as well, resulting in higher rates. And then there is the “inflation factor” to calculate.

I won’t make a guess as to what the actual rate will be next winter, but I wouldn’t be shocked to see it at around 6.5%-7% for a 30 yr. fixed. And only God knows what the rates will be in five years, but one thing I can say, if market forces are allowed to once again take over, interest rates will be much higher across the board.

[Bob]

[quote=AN]How high will rates go up to this Winter? Any prediction for the next 5 years?[/quote]

To get a better indication of when and how high rates will go, look at two things. 1)The continued purchase of securities by the Feds. 2) The general improvement in the economy.

If the Feds announce this summer that they are ending the purchasing of securities, mortgage rates could very well spike a full percentage point by the next day. Ironically, if the economy shows improvement later this summer, that will have a negative effect on the bond market as well, resulting in higher rates. And then there is the “inflation factor” to calculate.

I won’t make a guess as to what the actual rate will be next winter, but I wouldn’t be shocked to see it at around 6.5%-7% for a 30 yr. fixed. And only God knows what the rates will be in five years, but one thing I can say, if market forces are allowed to once again take over, interest rates will be much higher across the board.

[Bob]

[quote=AN]How high will rates go up to this Winter? Any prediction for the next 5 years?[/quote]

To get a better indication of when and how high rates will go, look at two things. 1)The continued purchase of securities by the Feds. 2) The general improvement in the economy.

If the Feds announce this summer that they are ending the purchasing of securities, mortgage rates could very well spike a full percentage point by the next day. Ironically, if the economy shows improvement later this summer, that will have a negative effect on the bond market as well, resulting in higher rates. And then there is the “inflation factor” to calculate.

I won’t make a guess as to what the actual rate will be next winter, but I wouldn’t be shocked to see it at around 6.5%-7% for a 30 yr. fixed. And only God knows what the rates will be in five years, but one thing I can say, if market forces are allowed to once again take over, interest rates will be much higher across the board.

[Bob]

[quote=AN]How high will rates go up to this Winter? Any prediction for the next 5 years?[/quote]

To get a better indication of when and how high rates will go, look at two things. 1)The continued purchase of securities by the Feds. 2) The general improvement in the economy.

If the Feds announce this summer that they are ending the purchasing of securities, mortgage rates could very well spike a full percentage point by the next day. Ironically, if the economy shows improvement later this summer, that will have a negative effect on the bond market as well, resulting in higher rates. And then there is the “inflation factor” to calculate.

I won’t make a guess as to what the actual rate will be next winter, but I wouldn’t be shocked to see it at around 6.5%-7% for a 30 yr. fixed. And only God knows what the rates will be in five years, but one thing I can say, if market forces are allowed to once again take over, interest rates will be much higher across the board.

[5yearwaiter]

Folks,

I am not against to Bob’s theorey and moreover that is one kind of hidden dangerous theorey while we trying to invest or trying for dream home. I have no gurantee how we are assured for future price retain if you jump into “today’s San Diego high prices”. Whatever the possibility as per Bob, I still want to act as a critic i.e against Bob’s theorey and here are my few questions …

Hey Bob nothing personal- but just want to evaluate what else Fed can do these below in case of higher interest rates –

1) What if our Fed would increase higer interest rates in all other sectors but not housing or mortgage(may be it standardise a level say 6%) – what would be the situation if this happens?.

2) If any of those above said 3 plans off the track, still Fed can handle pressure in other areas(like small business etc) of finance by increasing interest rates but not to the mortgage exclusively who is trying to acquire or buy homes in US …

Well the academic interventionist chariman may try to deploy some more trick(may not be a worthy one) but poor Dreamers still wait… n wait… eventually this never stop nor yield any gains soon to home buyers and by that time we are in deep recession cum hyper inflation term…

I tend to agree your theorey, but I have lost my faith on these academic…brainers who can play any extent … whatever those unpredictable results in either way!!!

[5yearwaiter]

Folks,

I am not against to Bob’s theorey and moreover that is one kind of hidden dangerous theorey while we trying to invest or trying for dream home. I have no gurantee how we are assured for future price retain if you jump into “today’s San Diego high prices”. Whatever the possibility as per Bob, I still want to act as a critic i.e against Bob’s theorey and here are my few questions …

Hey Bob nothing personal- but just want to evaluate what else Fed can do these below in case of higher interest rates –

1) What if our Fed would increase higer interest rates in all other sectors but not housing or mortgage(may be it standardise a level say 6%) – what would be the situation if this happens?.

2) If any of those above said 3 plans off the track, still Fed can handle pressure in other areas(like small business etc) of finance by increasing interest rates but not to the mortgage exclusively who is trying to acquire or buy homes in US …

Well the academic interventionist chariman may try to deploy some more trick(may not be a worthy one) but poor Dreamers still wait… n wait… eventually this never stop nor yield any gains soon to home buyers and by that time we are in deep recession cum hyper inflation term…

I tend to agree your theorey, but I have lost my faith on these academic…brainers who can play any extent … whatever those unpredictable results in either way!!!

[5yearwaiter]

Folks,

I am not against to Bob’s theorey and moreover that is one kind of hidden dangerous theorey while we trying to invest or trying for dream home. I have no gurantee how we are assured for future price retain if you jump into “today’s San Diego high prices”. Whatever the possibility as per Bob, I still want to act as a critic i.e against Bob’s theorey and here are my few questions …

Hey Bob nothing personal- but just want to evaluate what else Fed can do these below in case of higher interest rates –

1) What if our Fed would increase higer interest rates in all other sectors but not housing or mortgage(may be it standardise a level say 6%) – what would be the situation if this happens?.

2) If any of those above said 3 plans off the track, still Fed can handle pressure in other areas(like small business etc) of finance by increasing interest rates but not to the mortgage exclusively who is trying to acquire or buy homes in US …

Well the academic interventionist chariman may try to deploy some more trick(may not be a worthy one) but poor Dreamers still wait… n wait… eventually this never stop nor yield any gains soon to home buyers and by that time we are in deep recession cum hyper inflation term…

I tend to agree your theorey, but I have lost my faith on these academic…brainers who can play any extent … whatever those unpredictable results in either way!!!

[5yearwaiter]

Folks,

I am not against to Bob’s theorey and moreover that is one kind of hidden dangerous theorey while we trying to invest or trying for dream home. I have no gurantee how we are assured for future price retain if you jump into “today’s San Diego high prices”. Whatever the possibility as per Bob, I still want to act as a critic i.e against Bob’s theorey and here are my few questions …

Hey Bob nothing personal- but just want to evaluate what else Fed can do these below in case of higher interest rates –

1) What if our Fed would increase higer interest rates in all other sectors but not housing or mortgage(may be it standardise a level say 6%) – what would be the situation if this happens?.

2) If any of those above said 3 plans off the track, still Fed can handle pressure in other areas(like small business etc) of finance by increasing interest rates but not to the mortgage exclusively who is trying to acquire or buy homes in US …

Well the academic interventionist chariman may try to deploy some more trick(may not be a worthy one) but poor Dreamers still wait… n wait… eventually this never stop nor yield any gains soon to home buyers and by that time we are in deep recession cum hyper inflation term…

I tend to agree your theorey, but I have lost my faith on these academic…brainers who can play any extent … whatever those unpredictable results in either way!!!

[Author]

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