Three weeks ago, according to quasi-government mortgage giant Freddie Mac, the average rate for 30-year fixed mortgages stood at 4.82 percent. This week, the average rate was 5.59 percent.
Three weeks ago, according to quasi-government mortgage giant Freddie Mac, the average rate for 30-year fixed mortgages stood at 4.82 percent. This week, the average rate was 5.59 percent.
Selfishly speaking, I’m glad
Selfishly speaking, I’m glad my refi went through a few weeks ago.
Will this put downward
Will this put downward pressure on housing prices?
peterb wrote:Will this put
[quote=peterb]Will this put downward pressure on housing prices?[/quote]
Only time will tell. For those who are actively looking, price would have to t drop ~7-8% from 3 weeks ago just for them to maintain the same monthly payment.
AN wrote:Only time will tell.
[quote=AN]Only time will tell. For those who are actively looking, price would have to t drop ~7-8% from 3 weeks ago just for them to maintain the same monthly payment.[/quote]
I don’t believe this. Time and time again, the majority of the US population has proved to be irrational. The effect of the mortgage rate is secondary as other poster has pointed out. The marginal buyer will be forced out of the market because they can no longer afford the house. But others will still close the sale with 9% higher payment.
As an active buyer since
As an active buyer since Febuary – this changes the entire game for me. I’ve suddenly become obsessed w/ watching it go up.
Less buying power & I’m hitting the exit.
JACKQLYN wrote:As an active
[quote=JACKQLYN]As an active buyer since Febuary – this changes the entire game for me. I’ve suddenly become obsessed w/ watching it go up.
Less buying power & I’m hitting the exit.[/quote]
Will most people head for the exit or will they just buy a smaller house?
Yes, of course.
The smaller
Yes, of course.
The smaller house is just before the exit.
carlsbadworker wrote:AN
[quote=carlsbadworker][quote=AN]Only time will tell. For those who are actively looking, price would have to t drop ~7-8% from 3 weeks ago just for them to maintain the same monthly payment.[/quote]
I don’t believe this. Time and time again, the majority of the US population has proved to be irrational. The effect of the mortgage rate is secondary as other poster has pointed out. The marginal buyer will be forced out of the market because they can no longer afford the house. But others will still close the sale with 9% higher payment. [/quote]
I am not sure what you dont believe, it is just math. As rates move up, the principal must move down to maintain the same payment. On a 300k house, it is about 25k that must be reduced to maintain the same monthly payment.
Rationality about rates is a totally different story.
UCGal wrote:Selfishly
[quote=UCGal]Selfishly speaking, I’m glad my refi went through a few weeks ago.[/quote]
Also selfishly, I’m really bummed since I’ve got an offer on a short sale that was accepted in late April. I’d have to drop the offer by nearly $20k to keep the same monthly payment, but I don’t think it would fly.
Oh well, what’s bad for me is good for the country, right?
Right?
Grrrr.
I had not guessed it to go up
I had not guessed it to go up this fast this early. Fed/treasury said they wanted to spend 1.5 trillions on MBS, so far they spent 500 billions, only 1/3 of the way so based on that I was thinking low rates has many more months to go….
Rich is right on with his expectation of a shoot up of rates in the not so distant future.
I am now guessing that more rates hikes will ensue in the next months due to the many more treasury auctions we will have. It’s a matter of supply/demand of treasuries and also the trust of others on the ability to pay debt and inflation risk. Not sure what kind of things can be powerful enough to reverse that.
My big question is if the rate increase influence the market enough to bring down the price, or other factors will play to keep the price inflated above real market value. I have heard some argued that it may not be a sure thing that price goes down as rates go up.
I am very impressed with Rich’s ideas as usual. Helped me a great lot. Thanks!
The rising rates definitely
The rising rates definitely change the picture for me. I have been actively looking for the past few months in the low end of the market because my rent was more than the total cost of ownership would be. With the extra 8% in payments, that is less clear. Add to that (temporarily?) rising prices, the 25 other offers on the low end properties I can afford, shadow inventory that refuses to appear, and all the other caveats Rich talks about. A higher cost of borrowing may be just enough to keep me renting for better or worse.
I think this is just the next
I think this is just the next step in government manipulation. Earlier this year they dangled the tax credit carrot, low rates, and lowered inventory by moratoriums. People responded and the govt/banks are probably extremely pleased the have created a bubble market mentality again. It worked so why wouldn’t the greedy banks want to see if they can cash in a little extra profit during the summer. I predict the rates will go up this summer as they usually do. Then I think they will take a dip this fall one last time to try and unload the “shadow inventory” that we all are hoping is “REALLY” out there.
Worth a read
Worth a read today:
http://www.doctorhousingbubble.com/
The question we dont know
The question we dont know about that California graph is whether the spike represents a catch up on what was held back or whether it is the new level that will continue and/or grow.
peterb wrote:Worth a read
[quote=peterb]Worth a read today:
http://www.doctorhousingbubble.com/%5B/quote%5D
Hmmm .. Alt-A loans are not as riskier as sub prime loans. But the big chunk of Alt-A loans are going to hit in 1Q 2010. Doesn’t that mean the feds will have to keep the rates low until these majority loans are reset & locked in at a lower fixed rate. Employment report is not looking better; wouldn’t that keep the rates lower for a while? Your views?
Hope that Credit Suisse and Business week keeps that chart updated..
As I’m sure you are all
As I’m sure you are all aware, even rates in the mid 5’s are very low compared to historical norms. People whining about rates at these levels need to have their heads examined.
I think the explanation of
I think the explanation of rising treasury yields is less a consequence of improving economic conditions and more a consequence of waning appetite for treasuries.
The rising rates will drive down prices. The only question is by how much. I don’t think we’re out of the woods quite yet.
Market tanks and the rates
Market tanks and the rates may come back down. Due anytime now.
poorsaver wrote:As I’m sure
[quote=poorsaver]As I’m sure you are all aware, even rates in the mid 5’s are very low compared to historical norms. People whining about rates at these levels need to have their heads examined.[/quote]
Except that when rates are at 5%, a rise to 6% would be a 20% increase in mortgage rate… That’s a huge jump for such a short period. Homes are priced for the low interest rate. That’s why the government has put such effort into keeping it low, to artificially inflate house prices. Home prices should have to drop relatively significantly to accommodate the increases cost to buy, unless homes are effectively appreciating again.