rate change if Dems win??

[23109VC]

If Hillary, Obama, or some other Dem wins the presidential election – where do many of you seeing the rates go? Up? no change?

i’m one of those “on the fence” buyers..waiting to jump on something…. i am happily watching prices come down…and happily seeing rates stay low… but if rates go way up all of a sudden…my plan would be scrweed..as I’ll be able to afford less…

when I do buy, it’s going to be to stay for 10-20 years…or for good..i’m not going to buy a 2-5 year home….so i’d like to make sure and lock in while rates are still low…

any ideas?

[an]

Personally, I think price will move in the opposite direction of rates until the monthly payment is at the fundamental. So, if rates goes way up, price would have to go way down. Personally, I would much rather have super high rates and super low price rather than the other way around. This way, any additional payment will make a larger dent in the principal and you can write off more interest for taxes. That’s a win win for me. There’s no way price will stay the same if rate shoots up. Same reason as price wouldn’t stay the same if rates go way down.

[Happy renter]

The Gov’t (Rep or Dem) does not determine the interest rate. The short-term rate is determined by Fed. The long-term rate is affected by a lot of factors like bonds, inflation, US economy, Gov’t & Fed’s policy, banks & lenders, and even global economy as well.

It is my own opinion, if the housing market crashes, it will take a few years to recover. So, Fed will likely to keep the rate low. Look at the history of last housing downtime. The rate was kept realtively low for a few years. Especially, there are so many terrible mortgage problems now. If Fed rasies the rate a lot, it will cause serious recession. Right now, the Fed hands on and tries to bal. If it sees any market at risk, it will adjust the rate to bal the economy.

Nobody can make sure, only prediction! Any uncertain factor can affect the rate. However, interest rate is not like stock. It does not fluctuate a lot at a time. You should monitor the rate all the time if you are concerned.

Good Luck!

[PerryChase]

I’m with you asianautica.

Housing prices generally move in the opposite direction of interest rates so any interest rate hike will be offset by lower prices thus resulting in the same carrying cost. I’d rather have mortgage rates go up to 10% and housing prices adjust downward accordingly. Any would-be-buyer should hope so.

23109VC, another thing is if you’re thinking about remaining in your home for 20 years, or for good, you’d want rates to go way high (with commensurate downward housing prices) because rates don’t permanently stay high. You can then refinance your mortgage when rates come down and thus end-up with a low mortgage balance and low rates.

The worse thing would be for rates to get lower and prices to stagnate high. That will prevent existing buyer from going under water, it won’t help you buy a house.

To look at it another way, high prices combined low rates put a floor on your cost of ownership. But low prices combined with high rates put a ceiling on your cost of ownership. With the latter scenario, you have the potential of future appreciation windfall as well as the possibility to refinance at much lower rates thus further decreasing your cost of ownership. So hope for rates to go up with a matching decrease in property values.

[gold_dredger_phd]

If Hillary wins, she will impeach Bernanke and take over the Fed. We’ll have socialized medicine and rationed care like Britain.

If Osama wins, everyone will get free cocaine or a “get out of jail free card” for cocaine offenses.

[SD Realtor]

I am wondering if I will ever disagree with AN and Perry. Once again I agree with the two of you guys. One thing I am not so sure about though is if the political party has as much a bearing on interest rates as we think. I believe that external forces drive the 10 year and 30 year markets alot more then whoever is in the white house. Yes the fed drives the overnight rate but still…

I think we all universally agree that in rates must rise substantially in order to start dealing with our debt in the correct manner.

Sorry for straying from the subject line. IMO it is always a no brainer to buy a lower price home at a higher rate then a higher price home at a lower rate. One can run the calculations to see the crossover points on the payment. Of course as already mentioned, at some point in time, high rates will cycle down to lower rates and then you are in fat city as long as your home hasn’t depreciated to the point where you cannot refi.

SD Realtor

[PerryChase]

“… at some point in time, high rates will cycle down to lower rates and then you are in fat city as long as your home hasn’t depreciated to the point where you cannot refi.”
——–

If the relationship of housing prices to interest rates holds true, if you buy at a low price when rates are high, when rates cycle down, then housing prices will be up. At that point, you’ll really be in fat city because you’ll have 1) accumulated plenty of appreciation, and 2) the ability to refi at a lower rate = low carrying cost + plenty of equity.

After you refinance at a lower rate, if you then continue to make the same monthly payments as when the rates were high, your house will be paid-off much sooner.

[Author]

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