Interest rates

[briansd1]

[quote=FormerSanDiegan][quote=Huckleberry]

We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.

[/quote]

I don’t think we all agree rising interest rates automatically mean lower home prices.

If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)

Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).[/quote]

Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.

[SD Transplant]

http://www.housingwire.com/2010/12/09/freddie-mac-mortgage-rates-rise-for-fourth-consecutive-week

Thursday, December 9th, 2010, 11:26 am

Mortgage rates rose for the fourth consecutive week, according to the Freddie Mac Primary Mortgage Market survey released Thursday.

Frank Nothaft, chief economist at the government-sponsored entity, said rates followed suit behind bond yields, which increased during the week due to more investment. He said investment spawned from stabilization in Europe’s debt situation.

Freddie Mac reported the 30-year, fixed-rate mortgage at 4.61% for the week ending Dec. 9, up from 4.46% the week previous. The current rate is almost level with one year ago when the rate was 4.81%.

The 15-year FRM averaged 3.96% with a 0.7 origination point, up from 3.81% last week, but down from the 4.32% fixed-rate set one year ago.

Adjustable-rate mortgage rates also increased week-over-week. The rate for a 5-year Treasury-indexed, hybrid ARM hit 3.6%, up from 3.49% the week prior. The rate for a 1-year ARM averaged 3.27%, up from 3.25% the previous week. The rates one year ago for each of these types of mortgages were 4.26% and 4.24%, respectively.

A separate survey from Bankrate.com showed mortgage rates climbed to a six-month high. The 30-year FRM increased 18 basis points to 4.89%, according to the survey by the personal finance website. The 15-year FRM climbed 19 bps to 4.26%, and the 5/1 ARM increased 11 bps to 3.85%, and the 30-year fixed jumbo mortgage rate increased 10 bps to 5.39%.

[SD Transplant]

http://www.housingwire.com/2010/12/09/freddie-mac-mortgage-rates-rise-for-fourth-consecutive-week

Thursday, December 9th, 2010, 11:26 am

Mortgage rates rose for the fourth consecutive week, according to the Freddie Mac Primary Mortgage Market survey released Thursday.

Frank Nothaft, chief economist at the government-sponsored entity, said rates followed suit behind bond yields, which increased during the week due to more investment. He said investment spawned from stabilization in Europe’s debt situation.

Freddie Mac reported the 30-year, fixed-rate mortgage at 4.61% for the week ending Dec. 9, up from 4.46% the week previous. The current rate is almost level with one year ago when the rate was 4.81%.

The 15-year FRM averaged 3.96% with a 0.7 origination point, up from 3.81% last week, but down from the 4.32% fixed-rate set one year ago.

Adjustable-rate mortgage rates also increased week-over-week. The rate for a 5-year Treasury-indexed, hybrid ARM hit 3.6%, up from 3.49% the week prior. The rate for a 1-year ARM averaged 3.27%, up from 3.25% the previous week. The rates one year ago for each of these types of mortgages were 4.26% and 4.24%, respectively.

A separate survey from Bankrate.com showed mortgage rates climbed to a six-month high. The 30-year FRM increased 18 basis points to 4.89%, according to the survey by the personal finance website. The 15-year FRM climbed 19 bps to 4.26%, and the 5/1 ARM increased 11 bps to 3.85%, and the 30-year fixed jumbo mortgage rate increased 10 bps to 5.39%.

[SD Transplant]

http://www.housingwire.com/2010/12/09/freddie-mac-mortgage-rates-rise-for-fourth-consecutive-week

Thursday, December 9th, 2010, 11:26 am

Mortgage rates rose for the fourth consecutive week, according to the Freddie Mac Primary Mortgage Market survey released Thursday.

Frank Nothaft, chief economist at the government-sponsored entity, said rates followed suit behind bond yields, which increased during the week due to more investment. He said investment spawned from stabilization in Europe’s debt situation.

Freddie Mac reported the 30-year, fixed-rate mortgage at 4.61% for the week ending Dec. 9, up from 4.46% the week previous. The current rate is almost level with one year ago when the rate was 4.81%.

The 15-year FRM averaged 3.96% with a 0.7 origination point, up from 3.81% last week, but down from the 4.32% fixed-rate set one year ago.

Adjustable-rate mortgage rates also increased week-over-week. The rate for a 5-year Treasury-indexed, hybrid ARM hit 3.6%, up from 3.49% the week prior. The rate for a 1-year ARM averaged 3.27%, up from 3.25% the previous week. The rates one year ago for each of these types of mortgages were 4.26% and 4.24%, respectively.

A separate survey from Bankrate.com showed mortgage rates climbed to a six-month high. The 30-year FRM increased 18 basis points to 4.89%, according to the survey by the personal finance website. The 15-year FRM climbed 19 bps to 4.26%, and the 5/1 ARM increased 11 bps to 3.85%, and the 30-year fixed jumbo mortgage rate increased 10 bps to 5.39%.

[SD Transplant]

http://www.housingwire.com/2010/12/09/freddie-mac-mortgage-rates-rise-for-fourth-consecutive-week

Thursday, December 9th, 2010, 11:26 am

Mortgage rates rose for the fourth consecutive week, according to the Freddie Mac Primary Mortgage Market survey released Thursday.

Frank Nothaft, chief economist at the government-sponsored entity, said rates followed suit behind bond yields, which increased during the week due to more investment. He said investment spawned from stabilization in Europe’s debt situation.

Freddie Mac reported the 30-year, fixed-rate mortgage at 4.61% for the week ending Dec. 9, up from 4.46% the week previous. The current rate is almost level with one year ago when the rate was 4.81%.

The 15-year FRM averaged 3.96% with a 0.7 origination point, up from 3.81% last week, but down from the 4.32% fixed-rate set one year ago.

Adjustable-rate mortgage rates also increased week-over-week. The rate for a 5-year Treasury-indexed, hybrid ARM hit 3.6%, up from 3.49% the week prior. The rate for a 1-year ARM averaged 3.27%, up from 3.25% the previous week. The rates one year ago for each of these types of mortgages were 4.26% and 4.24%, respectively.

A separate survey from Bankrate.com showed mortgage rates climbed to a six-month high. The 30-year FRM increased 18 basis points to 4.89%, according to the survey by the personal finance website. The 15-year FRM climbed 19 bps to 4.26%, and the 5/1 ARM increased 11 bps to 3.85%, and the 30-year fixed jumbo mortgage rate increased 10 bps to 5.39%.

[SD Transplant]

http://www.housingwire.com/2010/12/09/freddie-mac-mortgage-rates-rise-for-fourth-consecutive-week

Thursday, December 9th, 2010, 11:26 am

Mortgage rates rose for the fourth consecutive week, according to the Freddie Mac Primary Mortgage Market survey released Thursday.

Frank Nothaft, chief economist at the government-sponsored entity, said rates followed suit behind bond yields, which increased during the week due to more investment. He said investment spawned from stabilization in Europe’s debt situation.

Freddie Mac reported the 30-year, fixed-rate mortgage at 4.61% for the week ending Dec. 9, up from 4.46% the week previous. The current rate is almost level with one year ago when the rate was 4.81%.

The 15-year FRM averaged 3.96% with a 0.7 origination point, up from 3.81% last week, but down from the 4.32% fixed-rate set one year ago.

Adjustable-rate mortgage rates also increased week-over-week. The rate for a 5-year Treasury-indexed, hybrid ARM hit 3.6%, up from 3.49% the week prior. The rate for a 1-year ARM averaged 3.27%, up from 3.25% the previous week. The rates one year ago for each of these types of mortgages were 4.26% and 4.24%, respectively.

A separate survey from Bankrate.com showed mortgage rates climbed to a six-month high. The 30-year FRM increased 18 basis points to 4.89%, according to the survey by the personal finance website. The 15-year FRM climbed 19 bps to 4.26%, and the 5/1 ARM increased 11 bps to 3.85%, and the 30-year fixed jumbo mortgage rate increased 10 bps to 5.39%.

[permabear]

Agree with brian. The degree and quickness of change matters as well.

Say you’re considering a mortgage balance of 700k. 1% increase is $583/month. Not chump change, but if it happens slowly over 1-2 years, raises and inflation will offset much of it.

Now say there’s a panic in the dollar due to sovereign debt concerns, and like Greece/Ireland, interest rates shoot up to 12% overnight. Then you’re probably f’ed if you’re trying to buy/sell at that specific moment. But if that happened, I would suggest sellers would delist, not wanting to take a sudden 200k hit.

I personally think a panic in the dollar is possible but still low likelihood (less than 10%). It would destabilize most of the world, and everyone knows it. If it does happen, the US will certainly ramp up the presses overnight and print to high heaven to offset it, which would decrease the impact of debt balances.

I think it is more likely that we will increase our pandering to/protection of foreign governments in the near term, in exchange for implicitly buying faith in the USD.

[permabear]

Agree with brian. The degree and quickness of change matters as well.

Say you’re considering a mortgage balance of 700k. 1% increase is $583/month. Not chump change, but if it happens slowly over 1-2 years, raises and inflation will offset much of it.

Now say there’s a panic in the dollar due to sovereign debt concerns, and like Greece/Ireland, interest rates shoot up to 12% overnight. Then you’re probably f’ed if you’re trying to buy/sell at that specific moment. But if that happened, I would suggest sellers would delist, not wanting to take a sudden 200k hit.

I personally think a panic in the dollar is possible but still low likelihood (less than 10%). It would destabilize most of the world, and everyone knows it. If it does happen, the US will certainly ramp up the presses overnight and print to high heaven to offset it, which would decrease the impact of debt balances.

I think it is more likely that we will increase our pandering to/protection of foreign governments in the near term, in exchange for implicitly buying faith in the USD.

[permabear]

Agree with brian. The degree and quickness of change matters as well.

Say you’re considering a mortgage balance of 700k. 1% increase is $583/month. Not chump change, but if it happens slowly over 1-2 years, raises and inflation will offset much of it.

Now say there’s a panic in the dollar due to sovereign debt concerns, and like Greece/Ireland, interest rates shoot up to 12% overnight. Then you’re probably f’ed if you’re trying to buy/sell at that specific moment. But if that happened, I would suggest sellers would delist, not wanting to take a sudden 200k hit.

I personally think a panic in the dollar is possible but still low likelihood (less than 10%). It would destabilize most of the world, and everyone knows it. If it does happen, the US will certainly ramp up the presses overnight and print to high heaven to offset it, which would decrease the impact of debt balances.

I think it is more likely that we will increase our pandering to/protection of foreign governments in the near term, in exchange for implicitly buying faith in the USD.

[permabear]

Agree with brian. The degree and quickness of change matters as well.

Say you’re considering a mortgage balance of 700k. 1% increase is $583/month. Not chump change, but if it happens slowly over 1-2 years, raises and inflation will offset much of it.

Now say there’s a panic in the dollar due to sovereign debt concerns, and like Greece/Ireland, interest rates shoot up to 12% overnight. Then you’re probably f’ed if you’re trying to buy/sell at that specific moment. But if that happened, I would suggest sellers would delist, not wanting to take a sudden 200k hit.

I personally think a panic in the dollar is possible but still low likelihood (less than 10%). It would destabilize most of the world, and everyone knows it. If it does happen, the US will certainly ramp up the presses overnight and print to high heaven to offset it, which would decrease the impact of debt balances.

I think it is more likely that we will increase our pandering to/protection of foreign governments in the near term, in exchange for implicitly buying faith in the USD.

[permabear]

Agree with brian. The degree and quickness of change matters as well.

Say you’re considering a mortgage balance of 700k. 1% increase is $583/month. Not chump change, but if it happens slowly over 1-2 years, raises and inflation will offset much of it.

Now say there’s a panic in the dollar due to sovereign debt concerns, and like Greece/Ireland, interest rates shoot up to 12% overnight. Then you’re probably f’ed if you’re trying to buy/sell at that specific moment. But if that happened, I would suggest sellers would delist, not wanting to take a sudden 200k hit.

I personally think a panic in the dollar is possible but still low likelihood (less than 10%). It would destabilize most of the world, and everyone knows it. If it does happen, the US will certainly ramp up the presses overnight and print to high heaven to offset it, which would decrease the impact of debt balances.

I think it is more likely that we will increase our pandering to/protection of foreign governments in the near term, in exchange for implicitly buying faith in the USD.

[(former)FormerSanDiegan]

[quote=briansd1]
Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.[/quote]

It depends on what accompanies higher interest rates.

If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)

If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).

Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.

[(former)FormerSanDiegan]

[quote=briansd1]
Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.[/quote]

It depends on what accompanies higher interest rates.

If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)

If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).

Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.

[(former)FormerSanDiegan]

[quote=briansd1]
Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.[/quote]

It depends on what accompanies higher interest rates.

If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)

If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).

Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.

[(former)FormerSanDiegan]

[quote=briansd1]
Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.[/quote]

It depends on what accompanies higher interest rates.

If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)

If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).

Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.

[Author]

Posts