Higher mortgage rates can be a good thing for buyers…

[SD Realtor]

I hear ya DW…

“That is unless the government starts offering their own financing.”

Are we really that far away from that statement being a reality? I would say that if the government did that, at least they would be able to make some money on the deal instead of just insuring all the crap they insure.

Change you can believe in!

[ralphfurley]

[quote=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.[/quote]
If the above scenario is true, why are people still waiting to buy? Will the mortage payments be lower even though rates are higher, because housing prices will fall faster than a Manny Pacquiao opponent?

Can’t the banks just hide inventory and keep the prices artificially high? Or will demand drop like crazy when rates go above 7%, forcing prices down? And if prices do drop further with rising interest rates, wouldn’t the monthly mortgage payments remain the same as they are right now? Maybe I gotta crunch some numbers…

[ralphfurley]

[quote=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.[/quote]
If the above scenario is true, why are people still waiting to buy? Will the mortage payments be lower even though rates are higher, because housing prices will fall faster than a Manny Pacquiao opponent?

Can’t the banks just hide inventory and keep the prices artificially high? Or will demand drop like crazy when rates go above 7%, forcing prices down? And if prices do drop further with rising interest rates, wouldn’t the monthly mortgage payments remain the same as they are right now? Maybe I gotta crunch some numbers…

[ralphfurley]

[quote=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.[/quote]
If the above scenario is true, why are people still waiting to buy? Will the mortage payments be lower even though rates are higher, because housing prices will fall faster than a Manny Pacquiao opponent?

Can’t the banks just hide inventory and keep the prices artificially high? Or will demand drop like crazy when rates go above 7%, forcing prices down? And if prices do drop further with rising interest rates, wouldn’t the monthly mortgage payments remain the same as they are right now? Maybe I gotta crunch some numbers…

[ralphfurley]

[quote=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.[/quote]
If the above scenario is true, why are people still waiting to buy? Will the mortage payments be lower even though rates are higher, because housing prices will fall faster than a Manny Pacquiao opponent?

Can’t the banks just hide inventory and keep the prices artificially high? Or will demand drop like crazy when rates go above 7%, forcing prices down? And if prices do drop further with rising interest rates, wouldn’t the monthly mortgage payments remain the same as they are right now? Maybe I gotta crunch some numbers…

[ralphfurley]

[quote=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.[/quote]
If the above scenario is true, why are people still waiting to buy? Will the mortage payments be lower even though rates are higher, because housing prices will fall faster than a Manny Pacquiao opponent?

Can’t the banks just hide inventory and keep the prices artificially high? Or will demand drop like crazy when rates go above 7%, forcing prices down? And if prices do drop further with rising interest rates, wouldn’t the monthly mortgage payments remain the same as they are right now? Maybe I gotta crunch some numbers…

[EconProf]

Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.

[EconProf]

Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.

[EconProf]

Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.

[EconProf]

Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.

[EconProf]

Bob, your scenario is both plausible and well-supported.
The Fed and this administration well understand that any significant rise in mortgage interest rates would quickly choke off any emerging recovery in the economy. Accordingly they will do whatever it takes to keep the easy money flowing to home buyers. They will stimulate or compel mortgages to be abundant and cheap, even if it means a two-tier rate structure in which bond market rates trend higher but home mortgages remain a bargain. Subsidizing buyers plays well politically and shows up elsewhere in policy.
For example, it is already clear that the big 3 automakers will be induced (bribed) to make small cars domestically via government subsidies to buyers, by some direct or indirect (hidden) means. Raises overall mileage average, “helps” beleagured car buyers, props up the overpaid UAW workers, and sells politically. Just the kind of politically driven market tinkering we’ll see more and more of, with destructive overall long-term effects.

[peterb]

Higher rates will bring down prices. And if you follow the strict definition of buying something, then that’s a good thing. Taking on debt, is not buying something. It’s taking on debt.

But the credit bubble is still deflating and the spiral of deflation will be back on track soon. This should be bringing rates down again. But the weight of unemployment and constricting credit will keep pushing RE prices downward as well. Time is a buyers friend here.

[peterb]

Higher rates will bring down prices. And if you follow the strict definition of buying something, then that’s a good thing. Taking on debt, is not buying something. It’s taking on debt.

But the credit bubble is still deflating and the spiral of deflation will be back on track soon. This should be bringing rates down again. But the weight of unemployment and constricting credit will keep pushing RE prices downward as well. Time is a buyers friend here.

[peterb]

Higher rates will bring down prices. And if you follow the strict definition of buying something, then that’s a good thing. Taking on debt, is not buying something. It’s taking on debt.

But the credit bubble is still deflating and the spiral of deflation will be back on track soon. This should be bringing rates down again. But the weight of unemployment and constricting credit will keep pushing RE prices downward as well. Time is a buyers friend here.

[peterb]

Higher rates will bring down prices. And if you follow the strict definition of buying something, then that’s a good thing. Taking on debt, is not buying something. It’s taking on debt.

But the credit bubble is still deflating and the spiral of deflation will be back on track soon. This should be bringing rates down again. But the weight of unemployment and constricting credit will keep pushing RE prices downward as well. Time is a buyers friend here.

[Author]

Posts