Higher mortgage rates can be a good thing for buyers…

[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.

[patientrenter]

I love the hypothesizing about what might happen if the govt (through the Fed, or Treasury, or FDIC, or FNMA, or whatever) were to simply supply cheap money for borrowers buying assets at overinflated prices.

We don’t have to hypothesize! Since summer and fall of 2007, virtually all the money used to buy homes in the US has been provided thanks to the US govt. The Federal Home Loan Bank system kicked in quietly right away, FNMA continued to pour in vast amounts of money, and the Treasury and the FDIC and FHA and so on have been the reason for $8 out of every $10 spend on housing in the 1 1/2 years.

Of course, most of these govt institutions arranged for the money to be provided via ludicrously underpriced and overly risky guarantees on the loans. Since most people aren’t smart enough to understand that lending is only “difficult” to the extent that there’s a risk of non-repayment, they don’t get it that the govt is nearly 100% responsible for the risk on these loans, and actually believe that the govt is only involved at the margins. It’s this abysmal ignorance on the part of the general public that led to schemes like the PPIP, where the govt takes on almost all the risk, but uses private money as a shield to conceal its extreme risk-taking.

Sigh, like SDR, I get apoplectic about this stuff sometimes. I will go pour another glass of el vino.

[patientrenter]

I love the hypothesizing about what might happen if the govt (through the Fed, or Treasury, or FDIC, or FNMA, or whatever) were to simply supply cheap money for borrowers buying assets at overinflated prices.

We don’t have to hypothesize! Since summer and fall of 2007, virtually all the money used to buy homes in the US has been provided thanks to the US govt. The Federal Home Loan Bank system kicked in quietly right away, FNMA continued to pour in vast amounts of money, and the Treasury and the FDIC and FHA and so on have been the reason for $8 out of every $10 spend on housing in the 1 1/2 years.

Of course, most of these govt institutions arranged for the money to be provided via ludicrously underpriced and overly risky guarantees on the loans. Since most people aren’t smart enough to understand that lending is only “difficult” to the extent that there’s a risk of non-repayment, they don’t get it that the govt is nearly 100% responsible for the risk on these loans, and actually believe that the govt is only involved at the margins. It’s this abysmal ignorance on the part of the general public that led to schemes like the PPIP, where the govt takes on almost all the risk, but uses private money as a shield to conceal its extreme risk-taking.

Sigh, like SDR, I get apoplectic about this stuff sometimes. I will go pour another glass of el vino.

[patientrenter]

I love the hypothesizing about what might happen if the govt (through the Fed, or Treasury, or FDIC, or FNMA, or whatever) were to simply supply cheap money for borrowers buying assets at overinflated prices.

We don’t have to hypothesize! Since summer and fall of 2007, virtually all the money used to buy homes in the US has been provided thanks to the US govt. The Federal Home Loan Bank system kicked in quietly right away, FNMA continued to pour in vast amounts of money, and the Treasury and the FDIC and FHA and so on have been the reason for $8 out of every $10 spend on housing in the 1 1/2 years.

Of course, most of these govt institutions arranged for the money to be provided via ludicrously underpriced and overly risky guarantees on the loans. Since most people aren’t smart enough to understand that lending is only “difficult” to the extent that there’s a risk of non-repayment, they don’t get it that the govt is nearly 100% responsible for the risk on these loans, and actually believe that the govt is only involved at the margins. It’s this abysmal ignorance on the part of the general public that led to schemes like the PPIP, where the govt takes on almost all the risk, but uses private money as a shield to conceal its extreme risk-taking.

Sigh, like SDR, I get apoplectic about this stuff sometimes. I will go pour another glass of el vino.

[patientrenter]

I love the hypothesizing about what might happen if the govt (through the Fed, or Treasury, or FDIC, or FNMA, or whatever) were to simply supply cheap money for borrowers buying assets at overinflated prices.

We don’t have to hypothesize! Since summer and fall of 2007, virtually all the money used to buy homes in the US has been provided thanks to the US govt. The Federal Home Loan Bank system kicked in quietly right away, FNMA continued to pour in vast amounts of money, and the Treasury and the FDIC and FHA and so on have been the reason for $8 out of every $10 spend on housing in the 1 1/2 years.

Of course, most of these govt institutions arranged for the money to be provided via ludicrously underpriced and overly risky guarantees on the loans. Since most people aren’t smart enough to understand that lending is only “difficult” to the extent that there’s a risk of non-repayment, they don’t get it that the govt is nearly 100% responsible for the risk on these loans, and actually believe that the govt is only involved at the margins. It’s this abysmal ignorance on the part of the general public that led to schemes like the PPIP, where the govt takes on almost all the risk, but uses private money as a shield to conceal its extreme risk-taking.

Sigh, like SDR, I get apoplectic about this stuff sometimes. I will go pour another glass of el vino.

[patientrenter]

I love the hypothesizing about what might happen if the govt (through the Fed, or Treasury, or FDIC, or FNMA, or whatever) were to simply supply cheap money for borrowers buying assets at overinflated prices.

We don’t have to hypothesize! Since summer and fall of 2007, virtually all the money used to buy homes in the US has been provided thanks to the US govt. The Federal Home Loan Bank system kicked in quietly right away, FNMA continued to pour in vast amounts of money, and the Treasury and the FDIC and FHA and so on have been the reason for $8 out of every $10 spend on housing in the 1 1/2 years.

Of course, most of these govt institutions arranged for the money to be provided via ludicrously underpriced and overly risky guarantees on the loans. Since most people aren’t smart enough to understand that lending is only “difficult” to the extent that there’s a risk of non-repayment, they don’t get it that the govt is nearly 100% responsible for the risk on these loans, and actually believe that the govt is only involved at the margins. It’s this abysmal ignorance on the part of the general public that led to schemes like the PPIP, where the govt takes on almost all the risk, but uses private money as a shield to conceal its extreme risk-taking.

Sigh, like SDR, I get apoplectic about this stuff sometimes. I will go pour another glass of el vino.

[Anonymous]

Agreed that rates are trending upward and will continue to do so for a long time, maybe years. The reason that this is happening is that we’re entering an inflationary period, because of the moves the govt has taken to get us out of sharply negative growth. Inflation in this situation is inevitable. Bernanke knows it and I’m sure he doesn’t like it…but it’s the lesser of two evils.

In any case, inflation effects all prices, including real estate. When mortgage rates were above 10% in the 70s, real estate prices still managed to rise. Why? Because we were in an inflationary period, because we were emerging from a deep recession. Sound familiar?

If you lock in your debt rate now by getting a fixed rate, you can reap all the gains caused by the coming inflation.

[Anonymous]

Agreed that rates are trending upward and will continue to do so for a long time, maybe years. The reason that this is happening is that we’re entering an inflationary period, because of the moves the govt has taken to get us out of sharply negative growth. Inflation in this situation is inevitable. Bernanke knows it and I’m sure he doesn’t like it…but it’s the lesser of two evils.

In any case, inflation effects all prices, including real estate. When mortgage rates were above 10% in the 70s, real estate prices still managed to rise. Why? Because we were in an inflationary period, because we were emerging from a deep recession. Sound familiar?

If you lock in your debt rate now by getting a fixed rate, you can reap all the gains caused by the coming inflation.

[Anonymous]

Agreed that rates are trending upward and will continue to do so for a long time, maybe years. The reason that this is happening is that we’re entering an inflationary period, because of the moves the govt has taken to get us out of sharply negative growth. Inflation in this situation is inevitable. Bernanke knows it and I’m sure he doesn’t like it…but it’s the lesser of two evils.

In any case, inflation effects all prices, including real estate. When mortgage rates were above 10% in the 70s, real estate prices still managed to rise. Why? Because we were in an inflationary period, because we were emerging from a deep recession. Sound familiar?

If you lock in your debt rate now by getting a fixed rate, you can reap all the gains caused by the coming inflation.

[Anonymous]

Agreed that rates are trending upward and will continue to do so for a long time, maybe years. The reason that this is happening is that we’re entering an inflationary period, because of the moves the govt has taken to get us out of sharply negative growth. Inflation in this situation is inevitable. Bernanke knows it and I’m sure he doesn’t like it…but it’s the lesser of two evils.

In any case, inflation effects all prices, including real estate. When mortgage rates were above 10% in the 70s, real estate prices still managed to rise. Why? Because we were in an inflationary period, because we were emerging from a deep recession. Sound familiar?

If you lock in your debt rate now by getting a fixed rate, you can reap all the gains caused by the coming inflation.

[Anonymous]

Agreed that rates are trending upward and will continue to do so for a long time, maybe years. The reason that this is happening is that we’re entering an inflationary period, because of the moves the govt has taken to get us out of sharply negative growth. Inflation in this situation is inevitable. Bernanke knows it and I’m sure he doesn’t like it…but it’s the lesser of two evils.

In any case, inflation effects all prices, including real estate. When mortgage rates were above 10% in the 70s, real estate prices still managed to rise. Why? Because we were in an inflationary period, because we were emerging from a deep recession. Sound familiar?

If you lock in your debt rate now by getting a fixed rate, you can reap all the gains caused by the coming inflation.

[Author]

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