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bsrsharma
Participant8% to 13% will tip a lot of people!
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In Credit Crisis, Large Mortgages Grow Costly
By FLOYD NORRIS and ERIC DASH
Published: August 12, 2007When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.
“I have been in the business 20 years and I have never seen” such a big swing in interest rates, said the broker, Bob Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.
“There is a lot of fear in the markets,” he added. “When there is fear, people have a tendency to overreact.”
The investment banker’s problem was that he was taking out a so-called jumbo mortgage – a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up…..
ParticipantThe reason that I think this house will be sold at $510K
Only if the buyers come up with $100K. Remember the new magic number – $417K. That is going to influence the pricing a lot. My guess is the sellers will jump with joy on an offer better than $440K; (i.e. if they have any sense and are reading the news)
ParticipantThe reason that I think this house will be sold at $510K
Only if the buyers come up with $100K. Remember the new magic number – $417K. That is going to influence the pricing a lot. My guess is the sellers will jump with joy on an offer better than $440K; (i.e. if they have any sense and are reading the news)
ParticipantThe reason that I think this house will be sold at $510K
Only if the buyers come up with $100K. Remember the new magic number – $417K. That is going to influence the pricing a lot. My guess is the sellers will jump with joy on an offer better than $440K; (i.e. if they have any sense and are reading the news)
ParticipantFor me the tipping point happened this morning. Heard lots of street noises and turned the blinds. My neighbor across the street was having a giant garage sale. They have the house on market for over 7 months now. Lot of lookers but no biters. I know there are many distressed properties on the street. I could add two and two together and see what is happening. This is probably going to be a REO closest to my home. It feels a little different when it is so close.
ParticipantFor me the tipping point happened this morning. Heard lots of street noises and turned the blinds. My neighbor across the street was having a giant garage sale. They have the house on market for over 7 months now. Lot of lookers but no biters. I know there are many distressed properties on the street. I could add two and two together and see what is happening. This is probably going to be a REO closest to my home. It feels a little different when it is so close.
ParticipantFor me the tipping point happened this morning. Heard lots of street noises and turned the blinds. My neighbor across the street was having a giant garage sale. They have the house on market for over 7 months now. Lot of lookers but no biters. I know there are many distressed properties on the street. I could add two and two together and see what is happening. This is probably going to be a REO closest to my home. It feels a little different when it is so close.
ParticipantBut they are still ridiculously overpriced. They are all worth $100K max. Yes, even in OC. That is the price where they may eventually move.
ParticipantBut they are still ridiculously overpriced. They are all worth $100K max. Yes, even in OC. That is the price where they may eventually move.
ParticipantBut they are still ridiculously overpriced. They are all worth $100K max. Yes, even in OC. That is the price where they may eventually move.
ParticipantWhere is the Fed getting its money?
Fed IS THE Money Factory. Its primary purpose is to create and control money supply by advancing short term loans to its customers – usually big banks and financial institutions. After the end of the Gold standard days, (that is where the word RESERVE comes from – Gold Reserves used to act as a restraint on money supply. The paper money being a proxy for Gold) US $ is fiat currency i.e. Fed can decide to create as much $ as it WANTS. This is an awesome and dangerous task and that is why Fed is usually very conservative in its policies (trying to fight inflation over other goals).
if this will kick up inflation?
If they inject, say, $100B into a $15T economy, that is less than 1%. And that is supposed to be very short term (3 days). Hence, it can't be used to drive up demand for anything (i.e. consumption). However, if they increase the money supply much more, say more than a couple of hundred billion and keep loaning out regularly (i.e. net effect is longer time), that may cause inflation. But if Fed wants to do this, a much more convenient route is to simply lower their funds rate/discount rate. That lowers the cost of borrowing and increases money supply. Obviously, lower interest rate causes foreigners to sell off $ assets causing devaluation. That in turn causes inflation on imported goods & services. That is like exchanging one kind of pain (credit crunch – may cause recession or low growth – may increase unemployment) to another (inflation – essentially an universal tax – makes every one a little poorer)
ParticipantWhere is the Fed getting its money?
Fed IS THE Money Factory. Its primary purpose is to create and control money supply by advancing short term loans to its customers – usually big banks and financial institutions. After the end of the Gold standard days, (that is where the word RESERVE comes from – Gold Reserves used to act as a restraint on money supply. The paper money being a proxy for Gold) US $ is fiat currency i.e. Fed can decide to create as much $ as it WANTS. This is an awesome and dangerous task and that is why Fed is usually very conservative in its policies (trying to fight inflation over other goals).
if this will kick up inflation?
If they inject, say, $100B into a $15T economy, that is less than 1%. And that is supposed to be very short term (3 days). Hence, it can't be used to drive up demand for anything (i.e. consumption). However, if they increase the money supply much more, say more than a couple of hundred billion and keep loaning out regularly (i.e. net effect is longer time), that may cause inflation. But if Fed wants to do this, a much more convenient route is to simply lower their funds rate/discount rate. That lowers the cost of borrowing and increases money supply. Obviously, lower interest rate causes foreigners to sell off $ assets causing devaluation. That in turn causes inflation on imported goods & services. That is like exchanging one kind of pain (credit crunch – may cause recession or low growth – may increase unemployment) to another (inflation – essentially an universal tax – makes every one a little poorer)
ParticipantWhere is the Fed getting its money?
Fed IS THE Money Factory. Its primary purpose is to create and control money supply by advancing short term loans to its customers – usually big banks and financial institutions. After the end of the Gold standard days, (that is where the word RESERVE comes from – Gold Reserves used to act as a restraint on money supply. The paper money being a proxy for Gold) US $ is fiat currency i.e. Fed can decide to create as much $ as it WANTS. This is an awesome and dangerous task and that is why Fed is usually very conservative in its policies (trying to fight inflation over other goals).
if this will kick up inflation?
If they inject, say, $100B into a $15T economy, that is less than 1%. And that is supposed to be very short term (3 days). Hence, it can't be used to drive up demand for anything (i.e. consumption). However, if they increase the money supply much more, say more than a couple of hundred billion and keep loaning out regularly (i.e. net effect is longer time), that may cause inflation. But if Fed wants to do this, a much more convenient route is to simply lower their funds rate/discount rate. That lowers the cost of borrowing and increases money supply. Obviously, lower interest rate causes foreigners to sell off $ assets causing devaluation. That in turn causes inflation on imported goods & services. That is like exchanging one kind of pain (credit crunch – may cause recession or low growth – may increase unemployment) to another (inflation – essentially an universal tax – makes every one a little poorer)
ParticipantRustico,
Yes, I too didn’t like it. It was called “The Celebration of the Lizard” performed by the San Diego Repertory Theater. But the general pessimism of the show matches the state of real estate today.
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