Apparently, the mortgage market locked up yesterday with rates going up. Lots of refinancers are apparently out of luck unless the rates go down again.
Mish's Global Economic Trend Analysis
Mish's Global Economic Trend Analysis
Yesterday was a very bad omen. Artificially low mortgage rates have come to an end. No one wants the long bonds and everyone wants the safety of the short end. This is the weed-killer for all those green shoots.
In the long term, true. In the short term, it helps. In the intermediate term, a gradual transition from historically low mortgage rates to relatively average/inline rates would probably be the best outcome.Low interest mortgages does nothing to solve the long term picture. Sure, it allows the current home owner to more easily afford the current "expensive" mortgage, but unless rates stay low forever, future buyers will not be able to afford the expensive house prices when rates go up. I guess if our economy goes into Hyper inflation, Mortgage mess will be solved!
Low interest mortgages does nothing to solve the long term picture. Sure, it allows the current home owner to more easily afford the current "expensive" mortgage, but unless rates stay low forever, future buyers will not be able to afford the expensive house prices when rates go up. I guess if our economy goes into Hyper inflation, Mortgage mess will be solved!
My first purchased home was a small condo in San Jose in 1989. The rate? 11%.For some perspective, I bought my current home in 2000. Rate was 8.25%...
Yes, it does look worrisome. I'm trying to figure out what the consequences might be but I'm just spinning my mental wheels. I hope that the stock market doesn't tank again.
There was a time when I would make light of these 'gloom and doom' posts. Now I find myself thinking, "That won't happen...will it?"
I'm supposed to sign my refi papers tonight. The rate lock is long gone. No idea what the rates and points will be now. This should be interesting. I signed up for 4.375% with about 1.7 points on 3/26/09 with a 30 day lock. That offer has been pretty stable up until yesterday (5/27/09). 5/26/09 they offered 4.375% for 1.8 points. Yesterday they wanted 3.963 points for 4.375%, or my original 1.7 points were good for about a 5% rate. This morning 4.75% was the lowest rate showing and they want 1.7 points for that. A little less than that right now.
So, depending on when they finalized the papers, my rate could be anywhere. If it's at the top of the spike I'm not going to sign. I'll have to think about 4.75%. That's still historically nice, and I feel pretty much like the bond market does. Only an appraisal and a subordination fee sunk so far.
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Hmmm, well. I disagree with that. I believe that the low rates are making a lot of real estate sales possible, which can only be a good thing IMO."
Not. An artificially low interest rate drives prices higher as most Americans buy the payment rather than the price. Any increase in interest rates will negatively correlate with housing prices. And artificially elevated housing prices make putting a reasonable amount of money down exceedingly difficult, which doesn't affect house traders nearly as much as those buying their first house. Consequently, we've seen no or low down payment mortgages go negative equity almost immediately with rate changes or bumps in localized markets.
A vast rate difference here for the same year...First home (1984) was at 10.25% with 2 points