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carloverParticipant
SD Realtor, you’ve never seen price declines of 0.03% to 0.04% in a single day? Swings of an 1/8 of a point at individual lenders are common, at the least they adjust by a 1/16 at a time, but mostly they adjust by a minimum 1/8 and move points around to make up any difference. If you look at the charts I attached earlier the shape of the declines (rate of decline) are not much different than those shown earlier in the year. The interesting thing the charts show is that mortgage rates seem to lead treasury rates down rather than follow them, except in the lates decline of course! Note that this may be caused by the different timing for treasury data vs. Mortgage (weekly for treasuries, daily for mortgages).
carloverParticipantArty, I don’t disagree with you that declining values are not going to be totally alleviated by declines in interest rates (barring returns to the low rates of 2003, 30 year fixed at 5.3%). However as in the past both affect affordability, and therefore lower interest rates will actually affect how much prices decline. Will prices still decline, probably, but lower interest will blunt the impacts of ARM resets as they won’t be as severe on a percentage basis. Housing prices and interest rates do not move entirely independently. The purpose of this post was to provide information to the readers of this site on some easy methods to get a read on the direction of mortgage interest rates.
A lot of people on this site feel that housing prices are going to drop drastically but I don’t buy it. What has really happened over the last 10 years is a drastic devaluing of the dollar, rather than a drastic increase in real estate prices. If you were going to buy a house with gold it would not cost much more today than it would have 10 years ago.
[img_assist|nid=4735|title=Gold|desc=|link=node|align=left|width=466|height=285]
Since major exporters like China have had their currencies pegged to the dollar this hasn’t led to significant inflation over the same time period. Will that continue, not likely.
carloverParticipantAs promised rates dropped by about 1/8 of a point today on both conforming and even jumbo loans. Based on what happened today with treasuries and the RNY as discussed in the original post, I would expect rates to drop another 30 to 40 basis points (0.03% to 0.04%) tomorrow.
Conforming Rates:
[img_assist|nid=4727|title=Conforming|desc=|link=node|align=left|width=466|height=424]Jumbo Rates:
[img_assist|nid=4728|title=Jumbo Rates|desc=|link=node|align=left|width=466|height=424]The scaling on the jumbo chart makes the treasury swings look much larger than they actually are due to the wild fluctuations in Jumbo loan rates over the last month. However, even jumbo rates are coming down and many credit unions and even Washington Mutual have backed off on the large premiums they were charging on Jumbo mortgages. Several credit unions I use are back down to around a 3/8 of a point premium on Jumbo’s over conforming loans. Also many banks are charging really high rates for Jumbo loans with zero points, but paying points is buying a much larger reduction in rates than it used to. Many jumbo loans are coming down 0.5% per point, vs. a more typical 0.25%. This tells me banks think the jumbo rate premiums will be shortlived and if you are willing to front some money for points they are willing to give you a much lower rate.
carloverParticipantThere is definately some lag in drops in the conforming rate relative to drops in the 10 year treasury. But the close to 0.2% drop in the Freddie Mac 60 day RNY by late friday afternoon (which dropped along with and actually exceeded drops in treasury yields) will cause rates to drop considerably on monday. I would be surprised if rates dropped by less than a 1/8 of a point on monday for conforming loans. I wouldn’t be surprised to see conforming rates drop to around 5.5% – 5.75% by the end of September barring some miraculous recovery of the stock market prior to that.
carloverParticipantCabrillo in Del Sur (Standard Pacific) looks to have dropped their prices by about $30,000.
http://www.stanpac.com/findhome/NeighborhoodIntro.aspx?NID=1327
Their base residence was priced at $712,990 until a few days ago and they had been very slowing creeping prices up all summer. Now it is $682,900
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