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June 12, 2007 at 2:43 PM #58798June 12, 2007 at 2:43 PM #58771SD RealtorParticipant
I would say that anyone hoping for double digit interest rates is asking for alot more then just low housing prices because if rates are up in the double digits, we will be having alot more to deal with then just housing topics.
Be careful what you ask for.
SD Realtor
June 12, 2007 at 2:43 PM #58800SD RealtorParticipantI would say that anyone hoping for double digit interest rates is asking for alot more then just low housing prices because if rates are up in the double digits, we will be having alot more to deal with then just housing topics.
Be careful what you ask for.
SD Realtor
June 12, 2007 at 2:48 PM #58773capemanParticipantI would love that! The house prices would drop a literal ton. Then buy and enjoy a huge mortgage deduction for a while until rates go low again when you can responsibly refi and shave years off of the payoff and at the same time keep or lower the payment. My parents did that and are only about 6-7 years away from payoff.
cheers,
chris
June 12, 2007 at 2:48 PM #58802capemanParticipantI would love that! The house prices would drop a literal ton. Then buy and enjoy a huge mortgage deduction for a while until rates go low again when you can responsibly refi and shave years off of the payoff and at the same time keep or lower the payment. My parents did that and are only about 6-7 years away from payoff.
cheers,
chris
June 12, 2007 at 2:54 PM #58777anParticipantI’m just speak theoretically when I say I want high rate & low price. Obviously, there are reasons why rates would go to such level and those reasons would affect jobs. But then that would in turn affect housing price even more than rates would. So, if we can keep those other variable static and just think of rate & price = monthly payment, it would make sense to want higher rate and lower price. Granted that housing is in equilibrium and not at an overbought level like we are at now. After all, isn’t long term average for rate is in the 8-9% range? If so, we’re still awhile away.
June 12, 2007 at 2:54 PM #58806anParticipantI’m just speak theoretically when I say I want high rate & low price. Obviously, there are reasons why rates would go to such level and those reasons would affect jobs. But then that would in turn affect housing price even more than rates would. So, if we can keep those other variable static and just think of rate & price = monthly payment, it would make sense to want higher rate and lower price. Granted that housing is in equilibrium and not at an overbought level like we are at now. After all, isn’t long term average for rate is in the 8-9% range? If so, we’re still awhile away.
June 12, 2007 at 2:58 PM #58781SD RealtorParticipantI am glad you would love that capeman. By the way… gather a couple of friends then pick one of them. Because that friend would be the one losing his job. Also find a couple more friends who want to borrow some money to start a small business. The tell them that they most likely will pay interest rates that will crush their business plan.
So once again, what you may wish for may happen… just make sure you have an understanding about the basic economic engine of how things work because alot more things get affected in an interest rate environment hovering in this double digit strata other then housing.
The amount of contraction is something people who were not around in the late 70s or early 80s just do not think about.
SD Realtor
June 12, 2007 at 2:58 PM #58810SD RealtorParticipantI am glad you would love that capeman. By the way… gather a couple of friends then pick one of them. Because that friend would be the one losing his job. Also find a couple more friends who want to borrow some money to start a small business. The tell them that they most likely will pay interest rates that will crush their business plan.
So once again, what you may wish for may happen… just make sure you have an understanding about the basic economic engine of how things work because alot more things get affected in an interest rate environment hovering in this double digit strata other then housing.
The amount of contraction is something people who were not around in the late 70s or early 80s just do not think about.
SD Realtor
June 12, 2007 at 3:03 PM #58783SD RealtorParticipantAN relatively speaking yes if you look at the long history of rates then yeah the 8-9% range is perhaps tolerable…
So yes theoretically speaking your statement makes sense. However we don’t live in the theoretical world. Frankly I think that as a country we are in a much more precarious situation now, then we were 30 years ago when rates went through the roof. I think it could be alot more of a problem now, then it was then.
SD Realtor
June 12, 2007 at 3:03 PM #58812SD RealtorParticipantAN relatively speaking yes if you look at the long history of rates then yeah the 8-9% range is perhaps tolerable…
So yes theoretically speaking your statement makes sense. However we don’t live in the theoretical world. Frankly I think that as a country we are in a much more precarious situation now, then we were 30 years ago when rates went through the roof. I think it could be alot more of a problem now, then it was then.
SD Realtor
June 12, 2007 at 3:17 PM #58785PerryChaseParticipantThe early Reagan years were different in that credit was not as widely available. People still paid cash back then and an Amex card was only for the business exec.
Since then we’ve moved to a monthly payment type mentality so everything is now priced according to what monthly payments consumers can afford. Hear a wife ask her husband “Honey, can we afford $20/month for that TV?”
Contrary to popular opinion, I don’t believe that the credit industry will shrink. Using computer models, the finance companies will just price-in the rise in defaults. If you’re willing to pay through the nose, you’ll still be able to get credit.
BTW, people don’t realize it but usury laws have been done away, first to allow the Paul Volcker interest rates hikes then to allow the finance companies to charge whatever the hell they want. People want to consume so they continue to borrow.
http://www.cashcall.com/General/Rates.aspx
Actually, I think high interest rates is good for the careful consumers. It encourages savings and not speculation. The housing payments will remain the same, but a stagnant housing market will be rid of all the specuvestors. The reason people were gambling to begin with is because they were searching for higher return than what their savings accounts could provide.
June 12, 2007 at 3:17 PM #58814PerryChaseParticipantThe early Reagan years were different in that credit was not as widely available. People still paid cash back then and an Amex card was only for the business exec.
Since then we’ve moved to a monthly payment type mentality so everything is now priced according to what monthly payments consumers can afford. Hear a wife ask her husband “Honey, can we afford $20/month for that TV?”
Contrary to popular opinion, I don’t believe that the credit industry will shrink. Using computer models, the finance companies will just price-in the rise in defaults. If you’re willing to pay through the nose, you’ll still be able to get credit.
BTW, people don’t realize it but usury laws have been done away, first to allow the Paul Volcker interest rates hikes then to allow the finance companies to charge whatever the hell they want. People want to consume so they continue to borrow.
http://www.cashcall.com/General/Rates.aspx
Actually, I think high interest rates is good for the careful consumers. It encourages savings and not speculation. The housing payments will remain the same, but a stagnant housing market will be rid of all the specuvestors. The reason people were gambling to begin with is because they were searching for higher return than what their savings accounts could provide.
June 12, 2007 at 3:19 PM #58787donaldduckmooreParticipantI agree, SD Realtor, although I hope the interest rate will go higher so that the house price will go lower, I hope the spike in bond rate is transient. Too much change in such a short time will have a lot of negative effects on the whole economy. I don’t expect bond rate increase is the culprit to steer our economy to a recession.
June 12, 2007 at 3:19 PM #58816donaldduckmooreParticipantI agree, SD Realtor, although I hope the interest rate will go higher so that the house price will go lower, I hope the spike in bond rate is transient. Too much change in such a short time will have a lot of negative effects on the whole economy. I don’t expect bond rate increase is the culprit to steer our economy to a recession.
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