Which Way Are Mortgage Rates Going?

[flyer]

Just wondered if anyone might share their opinion as to where mortgage rates will be in the next 6-12 months–up or down–and by how much??

[SD Realtor]

Watch the 10 year treasury yield. Then tack on a premium for the risk aversion of the secondary market.

If we have a recession or stay in the same economic strata of not giving a crap about how far the dollar craters then rates should stay in a narrow range. If we actually take action to try to deal with our outlandish deficit and regain some sort of respect for our currency then rates will go up. Given our spinelessness of those who forge economic policy I would bet on the former rather then the latter.

HLS have at it…

SD Realtor

[HLS]

I’m not even going to try….

When people ask me if rates are going up or down, my answer is YES.

When people ask if rates will change, my answer is YES.

If I could accurately predict, I would be trading bonds.

I know what rates were yesterday, and might have a slim idea about the next business day, (although Fridays are risky) but anything beyond that I don’t know.

I’ll tell you the par rate today…and what I think that you qualify for. Can’t do much beyond that.

BTW, possibly for a different thread, I just got word that my best STATED INCOME, STATED ASSET (conforming) program for scores above 680 is being eliminated next week…details to follow.

[flyer]

Thanks for the replies.

Would you have any ideas as to whether the next FED meeting on interest rates being held at the end of October might have any effect on mortgage rates one way or the other?

[HLS]

What exactly are you looking for ??

The housing & global credit situation is so screwed up that nobody really knows what to do. NOBODY.
THEY ARE GUESSING. It’s a facade.
They will try almost anything, so a fed meeting cut will bring even more predictions from people that really don’t know what they are talking about. This is not a text book case. It was total wreckless, irresponsibility on the governments part that allowed this to happen. A MAJOR screw up.

Having a good economy for a few years will result in a payback of hell for many people, financially and psychologically. Having bought a house will ruin some peoples lives FOREVER, in the same way that some peoples lives were ruined by being in the stock market in 1929. They NEVER recovered.

With CASH, you won’t suffer as bad or at all.

A FED rate cut is like putting a band-aid on someone who needs 50 stitches. It’s going to help for about two seconds.
The last one meant nothing to most people. I stated that clearly on the thread about it the day it happened.

There isn’t a person on earth who knows EXACTLY what to do to solve this crisis. There is no easy answer.
Time and pain will take its toll. Thousands will die before the global crisis is over.
Average Joe & Jane haven’t got a clue what’s coming.

I’m not sure if the OP is trying to pick an exact bottom or lowest possible rate. It isn’t possible. Nothing rings a bell at the top or bottom. Get over it and enjoy your life before it’s too late. Travel, eat, fish , hunt, do whatever you enjoy, and don’t waste time wondering how low rates can go. They are what they are.

There are going to be major economic consequences that will establish new rules going forward.
There are going to be major financial failures that haven’t even been discussed yet.

Today, WE are living with results of the NEW DEAL established in the 1930’s. There will be new rules and a new nickname.

We are in the 3rd inning of a 9 inning ball game. I wouldn’t even think of buying a home around here until at least the 7th inning stretch…

If I needed to refi, I would do it NOW, if I had some equity. If rates go down next year, you might be able to refi again, except the house will be worth less than it is today.

So many people are done that don’t even know it. They have fallen off a cliff but haven’t landed yet. There is nothing that can stop their fall.

[justdoitstewart]

HLS,

What do you do for a living? Mortgage broker?

[NotCranky]

HLS=Home Loan Specialist. I have thought that probably was the case since day one?

[NotCranky]

HLS=Home Loan Specialist. I have thought that probably was the case since day one?

[HLS]

Home Loans is one of the businesses that I am involved with.

esmith: Your reply is very textbook and not advice that I would give anybody.
I think that the chapter on global terror was left out, which is a very real threat.

I don’t think that you covered the possibility of a 0%-1% Discount OR Fed Funds Rate.
Just because something has never happened before, doesn’t mean that it can’t or won’t.

Our economy mess today is a result of Sept 11, 2001.
Low interest rates saved the country. That was a band-aid too. However, the govt failed us with their wisdom.

Most people want to think that when history repeats itself, only the good events repeat. It just isn’t true.

Just because there have been 10 prior cycles doesn’t mean that there is going to be an 11th.

The false sense of security that many people have and their expectations of what will happen is a huge problem, that goes unrecognized.

It repeats itself in different ways. The false sense today is what people think their homes are worth.
In the future the stock market and retirement accounts will the delusion that will need to be dealt with.

Denial is powerful. Use it wisely.

[Eugene]

I don’t think that you covered the possibility of a 0%-1% Discount OR Fed Funds Rate.

1% Fed Funds Rate is possible, but I don’t see it translating into lower mortgage rates. We all saw what happened to 10-year treasuries after the last cut.

[HLS]

Last time that happened, (1%)
30 YR rates were close to 5%
15 YR rates were 4.75%

In an effort to save a sinking ship, who knows what the “system” will offer….

Why aren’t more people scared about what is going on ??

[HLS]

Last time that happened, (1%)
30 YR rates were close to 5%
15 YR rates were 4.75%

In an effort to save a sinking ship, who knows what the “system” will offer….

Why aren’t more people scared about what is going on ??

[Eugene]

I don’t think that you covered the possibility of a 0%-1% Discount OR Fed Funds Rate.

1% Fed Funds Rate is possible, but I don’t see it translating into lower mortgage rates. We all saw what happened to 10-year treasuries after the last cut.

[HLS]

Home Loans is one of the businesses that I am involved with.

esmith: Your reply is very textbook and not advice that I would give anybody.
I think that the chapter on global terror was left out, which is a very real threat.

I don’t think that you covered the possibility of a 0%-1% Discount OR Fed Funds Rate.
Just because something has never happened before, doesn’t mean that it can’t or won’t.

Our economy mess today is a result of Sept 11, 2001.
Low interest rates saved the country. That was a band-aid too. However, the govt failed us with their wisdom.

Most people want to think that when history repeats itself, only the good events repeat. It just isn’t true.

Just because there have been 10 prior cycles doesn’t mean that there is going to be an 11th.

The false sense of security that many people have and their expectations of what will happen is a huge problem, that goes unrecognized.

It repeats itself in different ways. The false sense today is what people think their homes are worth.
In the future the stock market and retirement accounts will the delusion that will need to be dealt with.

Denial is powerful. Use it wisely.

[justdoitstewart]

HLS,

What do you do for a living? Mortgage broker?

[HLS]

What exactly are you looking for ??

The housing & global credit situation is so screwed up that nobody really knows what to do. NOBODY.
THEY ARE GUESSING. It’s a facade.
They will try almost anything, so a fed meeting cut will bring even more predictions from people that really don’t know what they are talking about. This is not a text book case. It was total wreckless, irresponsibility on the governments part that allowed this to happen. A MAJOR screw up.

Having a good economy for a few years will result in a payback of hell for many people, financially and psychologically. Having bought a house will ruin some peoples lives FOREVER, in the same way that some peoples lives were ruined by being in the stock market in 1929. They NEVER recovered.

With CASH, you won’t suffer as bad or at all.

A FED rate cut is like putting a band-aid on someone who needs 50 stitches. It’s going to help for about two seconds.
The last one meant nothing to most people. I stated that clearly on the thread about it the day it happened.

There isn’t a person on earth who knows EXACTLY what to do to solve this crisis. There is no easy answer.
Time and pain will take its toll. Thousands will die before the global crisis is over.
Average Joe & Jane haven’t got a clue what’s coming.

I’m not sure if the OP is trying to pick an exact bottom or lowest possible rate. It isn’t possible. Nothing rings a bell at the top or bottom. Get over it and enjoy your life before it’s too late. Travel, eat, fish , hunt, do whatever you enjoy, and don’t waste time wondering how low rates can go. They are what they are.

There are going to be major economic consequences that will establish new rules going forward.
There are going to be major financial failures that haven’t even been discussed yet.

Today, WE are living with results of the NEW DEAL established in the 1930’s. There will be new rules and a new nickname.

We are in the 3rd inning of a 9 inning ball game. I wouldn’t even think of buying a home around here until at least the 7th inning stretch…

If I needed to refi, I would do it NOW, if I had some equity. If rates go down next year, you might be able to refi again, except the house will be worth less than it is today.

So many people are done that don’t even know it. They have fallen off a cliff but haven’t landed yet. There is nothing that can stop their fall.

[flyer]

Thanks for the replies.

Would you have any ideas as to whether the next FED meeting on interest rates being held at the end of October might have any effect on mortgage rates one way or the other?

[HLS]

I’m not even going to try….

When people ask me if rates are going up or down, my answer is YES.

When people ask if rates will change, my answer is YES.

If I could accurately predict, I would be trading bonds.

I know what rates were yesterday, and might have a slim idea about the next business day, (although Fridays are risky) but anything beyond that I don’t know.

I’ll tell you the par rate today…and what I think that you qualify for. Can’t do much beyond that.

BTW, possibly for a different thread, I just got word that my best STATED INCOME, STATED ASSET (conforming) program for scores above 680 is being eliminated next week…details to follow.

[Eugene]

Current mortgage rates are near historic lows, there’s little room for them to go any lower, but plenty of room and good reasons to go higher. IMHO, 12 months from now, rates will probably be in 6-8% range. Rates below 5.5% are highly unlikely, rates above 8% and possibly as high as 10-12% could happen if things go too wrong.

Mortgage rates are basically 10-year treasury rates plus premium that represents increased risk of default by homeowner (vs. risk of default by the federal government, which is zero).

Both components have to go up in the long run. 10-year treasury rates are irrationally low. The only thing that keeps them down is continued intervention by China and Japan. When these two players decide to stop their game, dollar will crash and treasuries will go through the roof. However, they’ve been at it for 10+ years and I wouldn’t exclude the possibility that the game will continue for another 10. I certainly wouldn’t bet on it happening within 6-12 months. In the mean time treasury rates may climb gradually in response to the fed’s easing.

Prime and especially jumbo mortgage premiums will go up as the house bubble is unraveling, when prices start falling in earnest and foreclosures move beyond subprime.

[Eugene]

Current mortgage rates are near historic lows, there’s little room for them to go any lower, but plenty of room and good reasons to go higher. IMHO, 12 months from now, rates will probably be in 6-8% range. Rates below 5.5% are highly unlikely, rates above 8% and possibly as high as 10-12% could happen if things go too wrong.

Mortgage rates are basically 10-year treasury rates plus premium that represents increased risk of default by homeowner (vs. risk of default by the federal government, which is zero).

Both components have to go up in the long run. 10-year treasury rates are irrationally low. The only thing that keeps them down is continued intervention by China and Japan. When these two players decide to stop their game, dollar will crash and treasuries will go through the roof. However, they’ve been at it for 10+ years and I wouldn’t exclude the possibility that the game will continue for another 10. I certainly wouldn’t bet on it happening within 6-12 months. In the mean time treasury rates may climb gradually in response to the fed’s easing.

Prime and especially jumbo mortgage premiums will go up as the house bubble is unraveling, when prices start falling in earnest and foreclosures move beyond subprime.

[SD Realtor]

Watch the 10 year treasury yield. Then tack on a premium for the risk aversion of the secondary market.

If we have a recession or stay in the same economic strata of not giving a crap about how far the dollar craters then rates should stay in a narrow range. If we actually take action to try to deal with our outlandish deficit and regain some sort of respect for our currency then rates will go up. Given our spinelessness of those who forge economic policy I would bet on the former rather then the latter.

HLS have at it…

SD Realtor

[Author]

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