Mr Mortgage: Mortgage Rates Soar

[afx114]

My bags of Doritos are experiencing deflation:

PepsiCo recently reduced the amount of Tropicana orange juice you get in a large container by 7%, from 96 ounces to 89 ounces. Bags of Doritos, also made by PepsiCo, have been trimmed by as much as 2 ounces.

Full Article

So even though the bags of Doritos are deflating, the prices are staying the same, which means they are actually inflating! Whoa…

[davelj]

[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.

Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.

There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.

Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]

If we’re in a deflationary environment, in which prices are declining, then shouldn’t bond investors require a lower coupon (that is, the spread between the coupon and the rate of inflation stays the same, all else being equal) on the debt they hold? That’s why treasuries have such low yields, right? Because prices, overall, are declining. So if you believe in future deflation, shouldn’t mortgage rates drop? I think ultimately we’re going to end up with a meaningful amount of inflation, but that’s probably a few years off. But anyone that thinks we’re going to have deflation for the foreseeable future should expect mortgage rates to decline, not rise. Given the deflationary environment that we’re in, lower mortgage rates is not a big surprise (nor is the tightening of terms and conditions).

[davelj]

[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.

Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.

There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.

Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]

If we’re in a deflationary environment, in which prices are declining, then shouldn’t bond investors require a lower coupon (that is, the spread between the coupon and the rate of inflation stays the same, all else being equal) on the debt they hold? That’s why treasuries have such low yields, right? Because prices, overall, are declining. So if you believe in future deflation, shouldn’t mortgage rates drop? I think ultimately we’re going to end up with a meaningful amount of inflation, but that’s probably a few years off. But anyone that thinks we’re going to have deflation for the foreseeable future should expect mortgage rates to decline, not rise. Given the deflationary environment that we’re in, lower mortgage rates is not a big surprise (nor is the tightening of terms and conditions).

[davelj]

[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.

Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.

There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.

Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]

If we’re in a deflationary environment, in which prices are declining, then shouldn’t bond investors require a lower coupon (that is, the spread between the coupon and the rate of inflation stays the same, all else being equal) on the debt they hold? That’s why treasuries have such low yields, right? Because prices, overall, are declining. So if you believe in future deflation, shouldn’t mortgage rates drop? I think ultimately we’re going to end up with a meaningful amount of inflation, but that’s probably a few years off. But anyone that thinks we’re going to have deflation for the foreseeable future should expect mortgage rates to decline, not rise. Given the deflationary environment that we’re in, lower mortgage rates is not a big surprise (nor is the tightening of terms and conditions).

[davelj]

[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.

Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.

There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.

Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]

If we’re in a deflationary environment, in which prices are declining, then shouldn’t bond investors require a lower coupon (that is, the spread between the coupon and the rate of inflation stays the same, all else being equal) on the debt they hold? That’s why treasuries have such low yields, right? Because prices, overall, are declining. So if you believe in future deflation, shouldn’t mortgage rates drop? I think ultimately we’re going to end up with a meaningful amount of inflation, but that’s probably a few years off. But anyone that thinks we’re going to have deflation for the foreseeable future should expect mortgage rates to decline, not rise. Given the deflationary environment that we’re in, lower mortgage rates is not a big surprise (nor is the tightening of terms and conditions).

[davelj]

[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.

Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.

There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.

Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]

If we’re in a deflationary environment, in which prices are declining, then shouldn’t bond investors require a lower coupon (that is, the spread between the coupon and the rate of inflation stays the same, all else being equal) on the debt they hold? That’s why treasuries have such low yields, right? Because prices, overall, are declining. So if you believe in future deflation, shouldn’t mortgage rates drop? I think ultimately we’re going to end up with a meaningful amount of inflation, but that’s probably a few years off. But anyone that thinks we’re going to have deflation for the foreseeable future should expect mortgage rates to decline, not rise. Given the deflationary environment that we’re in, lower mortgage rates is not a big surprise (nor is the tightening of terms and conditions).

[bob2007]

AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?

[bob2007]

AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?

[bob2007]

AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?

[bob2007]

AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?

[bob2007]

AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?

[an]

[quote=bob2007]AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?[/quote]
Based on the GFE, here are their fees:
AimLoan.com Fees
Guaranteed Lender Fee $1,995.00
Guaranteed Discount Points $6,563.58
Total AimLoan.com Fees $8,558.58
Third Party Fees
Guaranteed Appraisal Fee $300.00
Closing Agent Fee $975.00
Title Insurance $650.00
Recording Fee $65.00
Total Third Party Fees $1,990.00
Required Advances
Interest Due at Closing $781.88
Homeowner’s Insurance Premium $1,375.00
Insurance Escrow/Impound Deposit $229.17
Property Tax Escrow/Impound Deposit $2,333.33
Total Required Advances $4,719.38

This is based on a 417k loan and a 550k purchased price.

[an]

[quote=bob2007]AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?[/quote]
Based on the GFE, here are their fees:
AimLoan.com Fees
Guaranteed Lender Fee $1,995.00
Guaranteed Discount Points $6,563.58
Total AimLoan.com Fees $8,558.58
Third Party Fees
Guaranteed Appraisal Fee $300.00
Closing Agent Fee $975.00
Title Insurance $650.00
Recording Fee $65.00
Total Third Party Fees $1,990.00
Required Advances
Interest Due at Closing $781.88
Homeowner’s Insurance Premium $1,375.00
Insurance Escrow/Impound Deposit $229.17
Property Tax Escrow/Impound Deposit $2,333.33
Total Required Advances $4,719.38

This is based on a 417k loan and a 550k purchased price.

[an]

[quote=bob2007]AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?[/quote]
Based on the GFE, here are their fees:
AimLoan.com Fees
Guaranteed Lender Fee $1,995.00
Guaranteed Discount Points $6,563.58
Total AimLoan.com Fees $8,558.58
Third Party Fees
Guaranteed Appraisal Fee $300.00
Closing Agent Fee $975.00
Title Insurance $650.00
Recording Fee $65.00
Total Third Party Fees $1,990.00
Required Advances
Interest Due at Closing $781.88
Homeowner’s Insurance Premium $1,375.00
Insurance Escrow/Impound Deposit $229.17
Property Tax Escrow/Impound Deposit $2,333.33
Total Required Advances $4,719.38

This is based on a 417k loan and a 550k purchased price.

[an]

[quote=bob2007]AN, do you know what they are charging for a Guaranteed Lending Fee on 417k?[/quote]
Based on the GFE, here are their fees:
AimLoan.com Fees
Guaranteed Lender Fee $1,995.00
Guaranteed Discount Points $6,563.58
Total AimLoan.com Fees $8,558.58
Third Party Fees
Guaranteed Appraisal Fee $300.00
Closing Agent Fee $975.00
Title Insurance $650.00
Recording Fee $65.00
Total Third Party Fees $1,990.00
Required Advances
Interest Due at Closing $781.88
Homeowner’s Insurance Premium $1,375.00
Insurance Escrow/Impound Deposit $229.17
Property Tax Escrow/Impound Deposit $2,333.33
Total Required Advances $4,719.38

This is based on a 417k loan and a 550k purchased price.

[Author]

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