rates moving up fast

[Arraya]

http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[patientrenter]

[quote=Arraya]http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[/quote]

Arraya, what limit does Ben have? That’s right, there isn’t one.

[patientrenter]

[quote=Arraya]http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[/quote]

Arraya, what limit does Ben have? That’s right, there isn’t one.

[patientrenter]

[quote=Arraya]http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[/quote]

Arraya, what limit does Ben have? That’s right, there isn’t one.

[patientrenter]

[quote=Arraya]http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[/quote]

Arraya, what limit does Ben have? That’s right, there isn’t one.

[patientrenter]

[quote=Arraya]http://globaleconomicanalysis.blogspot.com/
Mortgage banks are going to be flooded with calls from people wanting to lock at 4.75. Sorry folks, those rates are gone.

I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.

By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.

Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.

[/quote]

Arraya, what limit does Ben have? That’s right, there isn’t one.

[CA renter]

[quote=flu][quote=JohnAlt91941][quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]

How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.

I’d rather get the low price than the low interest rate. You can refinance later.
[/quote]

You really think you will be able to refinance at a lower rate in the forseeable future? I don’t see this happening…Historically, we’re at the lowest rates. Even if we creep up to say 6,7,8%, I don’t see how rates would suddenly come back down. It seems like the only direction for rates is up for a longer period of time.

I think a lot of the old adage sayings are going to be thrown out the windows. Similar to the outdated statement of it’s better to buy then rent…The statement “I can always refinance to a lower rate in the future” probably is going to be outdated, considering to take advantage of a rate lower than what you’d be able to get is probably way out there….like 15+ years…. Even then, at that point, what is the point of refinancing? Short of having a cash flow issue, you would be tacking on another 30 years of loan payments on top of an existing loan that you have already made payments to considerably for several years…I suppose you could switch to a 15 year loan, but again I doubt your 15 year loan rate will be much less than what you would be getting a 30 year loan in the short to mid term.
[/quote]

Agree with you 100% on this, flu. It’s why the “refi later” agrument never held water for me.

What higher rates do for buyers is:

-It usually establishes a smaller pool of buyers because fewer people will qualify for a loan at a higher rate. Also, when rates are high, money is tighter, and lenders will usually raise the standards for loan qualification. Prime borrowers (ample cash, exceptional FICO scores, stable jobs, verifiable income, and low DTI ratios) absolutely benefit in a high rate environment. You’ll see far fewer flippers and specuvestors with free/easy money clogging up the market. This should keep prices low and competition scarce.

-With high rates, any additional principal payments you make gives you more bang for the buck. You can accelerate the payoff much more easily in a high rate/low price environment.

-A greater percentage of your payment can be deducted, because a greater portion of your payment is going toward interest (though this can be offset by higher prices…the MID is not a panacea, by any stretch of the imagination).

-Given the same monthly payments, a higher rate will usually mean you pay a lower price. It’s easier to save for a down payment, and if you have a decent sum of money, you can get as close to paying cash as possible.

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.

It’s high time for that “change” President Obama was talking about.

[CA renter]

[quote=flu][quote=JohnAlt91941][quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]

How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.

I’d rather get the low price than the low interest rate. You can refinance later.
[/quote]

You really think you will be able to refinance at a lower rate in the forseeable future? I don’t see this happening…Historically, we’re at the lowest rates. Even if we creep up to say 6,7,8%, I don’t see how rates would suddenly come back down. It seems like the only direction for rates is up for a longer period of time.

I think a lot of the old adage sayings are going to be thrown out the windows. Similar to the outdated statement of it’s better to buy then rent…The statement “I can always refinance to a lower rate in the future” probably is going to be outdated, considering to take advantage of a rate lower than what you’d be able to get is probably way out there….like 15+ years…. Even then, at that point, what is the point of refinancing? Short of having a cash flow issue, you would be tacking on another 30 years of loan payments on top of an existing loan that you have already made payments to considerably for several years…I suppose you could switch to a 15 year loan, but again I doubt your 15 year loan rate will be much less than what you would be getting a 30 year loan in the short to mid term.
[/quote]

Agree with you 100% on this, flu. It’s why the “refi later” agrument never held water for me.

What higher rates do for buyers is:

-It usually establishes a smaller pool of buyers because fewer people will qualify for a loan at a higher rate. Also, when rates are high, money is tighter, and lenders will usually raise the standards for loan qualification. Prime borrowers (ample cash, exceptional FICO scores, stable jobs, verifiable income, and low DTI ratios) absolutely benefit in a high rate environment. You’ll see far fewer flippers and specuvestors with free/easy money clogging up the market. This should keep prices low and competition scarce.

-With high rates, any additional principal payments you make gives you more bang for the buck. You can accelerate the payoff much more easily in a high rate/low price environment.

-A greater percentage of your payment can be deducted, because a greater portion of your payment is going toward interest (though this can be offset by higher prices…the MID is not a panacea, by any stretch of the imagination).

-Given the same monthly payments, a higher rate will usually mean you pay a lower price. It’s easier to save for a down payment, and if you have a decent sum of money, you can get as close to paying cash as possible.

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.

It’s high time for that “change” President Obama was talking about.

[CA renter]

[quote=flu][quote=JohnAlt91941][quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]

How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.

I’d rather get the low price than the low interest rate. You can refinance later.
[/quote]

You really think you will be able to refinance at a lower rate in the forseeable future? I don’t see this happening…Historically, we’re at the lowest rates. Even if we creep up to say 6,7,8%, I don’t see how rates would suddenly come back down. It seems like the only direction for rates is up for a longer period of time.

I think a lot of the old adage sayings are going to be thrown out the windows. Similar to the outdated statement of it’s better to buy then rent…The statement “I can always refinance to a lower rate in the future” probably is going to be outdated, considering to take advantage of a rate lower than what you’d be able to get is probably way out there….like 15+ years…. Even then, at that point, what is the point of refinancing? Short of having a cash flow issue, you would be tacking on another 30 years of loan payments on top of an existing loan that you have already made payments to considerably for several years…I suppose you could switch to a 15 year loan, but again I doubt your 15 year loan rate will be much less than what you would be getting a 30 year loan in the short to mid term.
[/quote]

Agree with you 100% on this, flu. It’s why the “refi later” agrument never held water for me.

What higher rates do for buyers is:

-It usually establishes a smaller pool of buyers because fewer people will qualify for a loan at a higher rate. Also, when rates are high, money is tighter, and lenders will usually raise the standards for loan qualification. Prime borrowers (ample cash, exceptional FICO scores, stable jobs, verifiable income, and low DTI ratios) absolutely benefit in a high rate environment. You’ll see far fewer flippers and specuvestors with free/easy money clogging up the market. This should keep prices low and competition scarce.

-With high rates, any additional principal payments you make gives you more bang for the buck. You can accelerate the payoff much more easily in a high rate/low price environment.

-A greater percentage of your payment can be deducted, because a greater portion of your payment is going toward interest (though this can be offset by higher prices…the MID is not a panacea, by any stretch of the imagination).

-Given the same monthly payments, a higher rate will usually mean you pay a lower price. It’s easier to save for a down payment, and if you have a decent sum of money, you can get as close to paying cash as possible.

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.

It’s high time for that “change” President Obama was talking about.

[CA renter]

[quote=flu][quote=JohnAlt91941][quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]

How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.

I’d rather get the low price than the low interest rate. You can refinance later.
[/quote]

You really think you will be able to refinance at a lower rate in the forseeable future? I don’t see this happening…Historically, we’re at the lowest rates. Even if we creep up to say 6,7,8%, I don’t see how rates would suddenly come back down. It seems like the only direction for rates is up for a longer period of time.

I think a lot of the old adage sayings are going to be thrown out the windows. Similar to the outdated statement of it’s better to buy then rent…The statement “I can always refinance to a lower rate in the future” probably is going to be outdated, considering to take advantage of a rate lower than what you’d be able to get is probably way out there….like 15+ years…. Even then, at that point, what is the point of refinancing? Short of having a cash flow issue, you would be tacking on another 30 years of loan payments on top of an existing loan that you have already made payments to considerably for several years…I suppose you could switch to a 15 year loan, but again I doubt your 15 year loan rate will be much less than what you would be getting a 30 year loan in the short to mid term.
[/quote]

Agree with you 100% on this, flu. It’s why the “refi later” agrument never held water for me.

What higher rates do for buyers is:

-It usually establishes a smaller pool of buyers because fewer people will qualify for a loan at a higher rate. Also, when rates are high, money is tighter, and lenders will usually raise the standards for loan qualification. Prime borrowers (ample cash, exceptional FICO scores, stable jobs, verifiable income, and low DTI ratios) absolutely benefit in a high rate environment. You’ll see far fewer flippers and specuvestors with free/easy money clogging up the market. This should keep prices low and competition scarce.

-With high rates, any additional principal payments you make gives you more bang for the buck. You can accelerate the payoff much more easily in a high rate/low price environment.

-A greater percentage of your payment can be deducted, because a greater portion of your payment is going toward interest (though this can be offset by higher prices…the MID is not a panacea, by any stretch of the imagination).

-Given the same monthly payments, a higher rate will usually mean you pay a lower price. It’s easier to save for a down payment, and if you have a decent sum of money, you can get as close to paying cash as possible.

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.

It’s high time for that “change” President Obama was talking about.

[CA renter]

[quote=flu][quote=JohnAlt91941][quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]

How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.

I’d rather get the low price than the low interest rate. You can refinance later.
[/quote]

You really think you will be able to refinance at a lower rate in the forseeable future? I don’t see this happening…Historically, we’re at the lowest rates. Even if we creep up to say 6,7,8%, I don’t see how rates would suddenly come back down. It seems like the only direction for rates is up for a longer period of time.

I think a lot of the old adage sayings are going to be thrown out the windows. Similar to the outdated statement of it’s better to buy then rent…The statement “I can always refinance to a lower rate in the future” probably is going to be outdated, considering to take advantage of a rate lower than what you’d be able to get is probably way out there….like 15+ years…. Even then, at that point, what is the point of refinancing? Short of having a cash flow issue, you would be tacking on another 30 years of loan payments on top of an existing loan that you have already made payments to considerably for several years…I suppose you could switch to a 15 year loan, but again I doubt your 15 year loan rate will be much less than what you would be getting a 30 year loan in the short to mid term.
[/quote]

Agree with you 100% on this, flu. It’s why the “refi later” agrument never held water for me.

What higher rates do for buyers is:

-It usually establishes a smaller pool of buyers because fewer people will qualify for a loan at a higher rate. Also, when rates are high, money is tighter, and lenders will usually raise the standards for loan qualification. Prime borrowers (ample cash, exceptional FICO scores, stable jobs, verifiable income, and low DTI ratios) absolutely benefit in a high rate environment. You’ll see far fewer flippers and specuvestors with free/easy money clogging up the market. This should keep prices low and competition scarce.

-With high rates, any additional principal payments you make gives you more bang for the buck. You can accelerate the payoff much more easily in a high rate/low price environment.

-A greater percentage of your payment can be deducted, because a greater portion of your payment is going toward interest (though this can be offset by higher prices…the MID is not a panacea, by any stretch of the imagination).

-Given the same monthly payments, a higher rate will usually mean you pay a lower price. It’s easier to save for a down payment, and if you have a decent sum of money, you can get as close to paying cash as possible.

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.

It’s high time for that “change” President Obama was talking about.

[Bob]

[quote=CA renter]

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.[/quote]

Excellent reply !

In my opinion, the absolute best course of action, not only for the housing market, but for the overall economy, would be higher interest rates and higher mortgage rates. Higher rates would weed out the “marginally qualified” purchasers who barely have enough cash on hand for the down payment, yet are creating bidding wars because they got approved through the FHA. Once the artificial demand has been eliminated, the free market can then dictate what prices should be.

And the same thing should apply with mortgage rates – the Feds should get the hell out of the “quantitative easing” business, and allow rates to be set based on what the market will bear. Higher rates would bring down prices and make real estate more affordable. Of course, the NAR, as well as builders, wouldn’t be too happy with my suggestion…I suppose thats why they’ve spent so much time and money lobbying the Obama administration in support of his foreclosure agenda to prop up prices.

[Bob]

[quote=CA renter]

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.[/quote]

Excellent reply !

In my opinion, the absolute best course of action, not only for the housing market, but for the overall economy, would be higher interest rates and higher mortgage rates. Higher rates would weed out the “marginally qualified” purchasers who barely have enough cash on hand for the down payment, yet are creating bidding wars because they got approved through the FHA. Once the artificial demand has been eliminated, the free market can then dictate what prices should be.

And the same thing should apply with mortgage rates – the Feds should get the hell out of the “quantitative easing” business, and allow rates to be set based on what the market will bear. Higher rates would bring down prices and make real estate more affordable. Of course, the NAR, as well as builders, wouldn’t be too happy with my suggestion…I suppose thats why they’ve spent so much time and money lobbying the Obama administration in support of his foreclosure agenda to prop up prices.

[Bob]

[quote=CA renter]

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.[/quote]

Excellent reply !

In my opinion, the absolute best course of action, not only for the housing market, but for the overall economy, would be higher interest rates and higher mortgage rates. Higher rates would weed out the “marginally qualified” purchasers who barely have enough cash on hand for the down payment, yet are creating bidding wars because they got approved through the FHA. Once the artificial demand has been eliminated, the free market can then dictate what prices should be.

And the same thing should apply with mortgage rates – the Feds should get the hell out of the “quantitative easing” business, and allow rates to be set based on what the market will bear. Higher rates would bring down prices and make real estate more affordable. Of course, the NAR, as well as builders, wouldn’t be too happy with my suggestion…I suppose thats why they’ve spent so much time and money lobbying the Obama administration in support of his foreclosure agenda to prop up prices.

[Bob]

[quote=CA renter]

IMHO, higher rates are a win-win-win, for buyers and for savers. They’ve suppressed rates for far too long, and let the lowest cockroaches of the world (irresponsible bankers, borrowers, and speculators) destroy our financial system.[/quote]

Excellent reply !

In my opinion, the absolute best course of action, not only for the housing market, but for the overall economy, would be higher interest rates and higher mortgage rates. Higher rates would weed out the “marginally qualified” purchasers who barely have enough cash on hand for the down payment, yet are creating bidding wars because they got approved through the FHA. Once the artificial demand has been eliminated, the free market can then dictate what prices should be.

And the same thing should apply with mortgage rates – the Feds should get the hell out of the “quantitative easing” business, and allow rates to be set based on what the market will bear. Higher rates would bring down prices and make real estate more affordable. Of course, the NAR, as well as builders, wouldn’t be too happy with my suggestion…I suppose thats why they’ve spent so much time and money lobbying the Obama administration in support of his foreclosure agenda to prop up prices.

[Author]

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