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30 year mortgage rate explodes

By AD follow AD   2013 Jul 6, 12:43pm 8,774 views   32 comments   watch   nsfw   quote   share    


#housing

1   Homeboy   ignore (2)   2013 Jul 6, 7:16pm     ↓ dislike (1)   quote   flag        

swebb says

In fact US rates dipped in the weeks following your comment (dipped as in went down, which is somewhere other than up)

I don't consider a 0.1% "dip" to be significant. On a $500K house, that would be about a $30 difference in payments - basically nothing. Rates have gone up about a percent now, and never hit a new bottom. They were about 0.1% off the bottom when I posted the comment. I sure hope you're not hanging your hat on that. LOL.

Glad you agree with my other comment, though, because that was my point. You weren't likely to get a better deal than 3.5% locked in for the duration of your loan. Too late for that now.

2   Homeboy   ignore (2)   2013 Jul 6, 7:31pm     ↓ dislike (1)   quote   flag        

Oh, I get it now, swebb. You're mad 'cuz I schooled you on glyphosate usage in that other thread, where I showed you that the increased usage of glyphosate actually REPLACED more dangerous herbicides. Ha ha - I guess everybody has an axe to grind.

3   lostand confused   ignore (0)   2013 Jul 7, 1:27am     ↓ dislike (0)   quote   flag        

What I am curious about is, why the FED even mentioned tapering? The jobs added is going up-but mostly temp jobs. The food stamp usage is at lifetime highs, the employment participation rate is close to 4 decade lows. It is not like the economy is booming. The FED knows that-it just made me wonder if they saw something even more dangerous to the economy to mention tapering of QE? They could have just continued QE for a few years-yeah the balance sheet would have grown another 3 trillion-but they don't seem to care about those pesky details. I wonder what do they see?

4   swebb   ignore (2)   2013 Jul 7, 3:26am     ↓ dislike (1)   quote   flag        

Homeboy says

Oh, I get it now, swebb. You're mad 'cuz I schooled you on glyphosate usage in that other thread, where I showed you that the increased usage of glyphosate actually REPLACED more dangerous herbicides. Ha ha - I guess everybody has an axe to grind.

Ha! Your point about glyphosate replacing more dangerous pesticides is a fair and valid one, but not at all what we were discussing. If you recall you missed the connection between GMO and the use of glyphosate, and were just about as wrong as you could be.

5   swebb   ignore (2)   2013 Jul 7, 3:29am     ↓ dislike (1)   quote   flag        

Homeboy says

I don't consider a 0.1% "dip" to be significant. On a $500K house, that would be about a $30 difference in payments - basically nothing. Rates have gone up about a percent now, and never hit a new bottom. They were about 0.1% off the bottom when I posted the comment. I sure hope you're not hanging your hat on that. LOL.

I don't either - the real point is that just because rates did go up does not mean that had no where to go but up, as supported by rates currently being offered in other countries (in other words, if our economy starts to look more like Japan, we could see rates go down as they have in Japan)...that rates in fact did go up doesn't make you right.

6   evilmonkeyboy   ignore (0)   2013 Jul 7, 3:30am     ↓ dislike (0)   quote   flag        

robertoaribas says

Clearly, the Fed did not expect such a violent reaction. Hence they are walking the statement back a bit in subsequent public speeches.

There are a few ironies:

1. Measured inflation is actually lower than when they started this latest QE. That would seem to imply deflation is even more of a risk now, and hence NOT a time to slow down.

2. Europe is tipping back into recession.

3. Growth in China is slowing.

4. There are even more sequestration automatic cuts in 2014;

Given those 4 points, the timing of the remark seems quite odd. Also, the market reaction seems to be quite an overreaction; While rates must rise someday, even without ANY QE, I'm not sure today's rates are justified, and may be an emotional overreaction by the market.

QE has to end at some point so the markets are going to responed when the FED starts dropping hints.
If you really think that the markets had an emotional overreaction you should buy bonds right now. Perfect buying opportunity, right?

7   mell   ignore (3)   2013 Jul 7, 3:31am     ↓ dislike (0)   quote   flag        

robertoaribas says

1. Measured inflation is actually lower than when they started this latest QE. That would seem to imply deflation is even more of a risk now, and hence NOT a time to slow down.

Inflation is super high (>= 5%) and already wrecking the middle class, at least in areas where it matters, health care, child care, energy, food, shelter (seems to have topped out now somewhat). Keeping the criminal QE charade going and racking up more debt will make it worse. Prices need to come down significantly. The more debt this country and its citizens take on the more violent will be the reaction when rates just increase by a notch.

8   anotheraccount   ignore (1)   2013 Jul 7, 3:37am     ↓ dislike (0)   quote   flag        

I think this sell off has everything to do with Obama essentially "firing" Bernanke in his Charlie Rose interview.

US 10 year is at 2.7. German bund is at 1.7. Japan is at 0.85.

My guess is that US goes back down to 2.2-2.4 area.

9   Homeboy   ignore (2)   2013 Jul 7, 5:55am     ↓ dislike (1)   quote   flag        

swebb says

Ha! Your point about glyphosate replacing more dangerous pesticides is a fair and valid one, but not at all what we were discussing. If you recall you missed the connection between GMO and the use of glyphosate, and were just about as wrong as you could be.

Ha ha. O.K., I again concede that there is a correlation between increased usage of Roundup and GMO usage, so you were correct to say that. But since usage of more dangerous herbicides went down, it's not a bad thing.

10   Homeboy   ignore (2)   2013 Jul 7, 6:00am     ↓ dislike (1)   quote   flag        

swebb says

I don't either - the real point is that just because rates did go up does not mean that had no where to go but up, as supported by rates currently being offered in other countries (in other words, if our economy starts to look more like Japan, we could see rates go down as they have in Japan)...that rates in fact did go up doesn't make you right.

Sure it does. I made a prediction, and it came to fruition. I thought it unlikely that interest rates would continue to go below the rate of inflation, effectively zero interest, before they went up again, Japan's example notwithstanding. People make predictions here all the time, and then they brag when they turned out to be right. If there were no possibility of rates going further down, then I wouldn't have been making a prediction; I would have simply been stating a known fact. Why are you trying to rob me of my victory? I just feel like you're still mad about the glyphosate thing.

11   anotheraccount   ignore (1)   2013 Jul 7, 6:07am     ↓ dislike (0)   quote   flag        

All real estate speculators know that this is not good. I did not except rates to get above 2.4 this year. The fact that it went from 1.6 to 2.7 in two months is pretty nuts. In percentage terms it's worse than 1994.

I expect Fed officials to wage a campaign to talk rates down next week. If they are not successful, housing is done.

12   anotheraccount   ignore (1)   2013 Jul 7, 6:36am     ↓ dislike (0)   quote   flag        

robertoaribas says

I think rising rates will have zero effect on the lower end of the market;

I don't know about zero, but I agree that there will be more pain in mid and upper end in California. If you remember, my posts from last year focused on housing over 750K having a spring top.

13   anotheraccount   ignore (1)   2013 Jul 7, 6:46am     ↓ dislike (0)   quote   flag        

robertoaribas says

Ditto at all price points, pushing buyers right into the most competitive part of the market.

After a two month sell off, short duration em bond etf like ELD yields 4.56 with tiny transaction fees. Why would a mutual fund or a hedge fund be buying real estate now that yields 4-5% and has a 6% liquidation fee?

14   chanakya4773   ignore (1)   2013 Jul 7, 8:32am     ↓ dislike (0)   quote   flag        

robertoaribas says

Actually, the reduced buying power of typical lower middle class buyers pushes them right back into that housing price: the couple who were approved for $220K just a couple weeks ago, now have to fight for a $200K home... Ditto at all price points, pushing buyers right into the most competitive part of the market.

I think rising rates will have zero effect on the lower end of the market;

something is wrong with this analysis. Rising rates will have -ve effect on every type of housing market even though the effect will be slightly different. the increased inventory ( due to reduced demand) on high end will put pressure on the low end as well.
if a 250K home ( high end) falls to 150K, it automatically puts pressure on the house which used to be 150K ( low end) . This happens at every price point.

15   Goran_K   ignore (4)   2013 Jul 7, 8:50am     ↓ dislike (1)   quote   flag        

mell says

robertoaribas says

1. Measured inflation is actually lower than when they started this latest QE. That would seem to imply deflation is even more of a risk now, and hence NOT a time to slow down.

Inflation is super high (>= 5%) and already wrecking the middle class, at least in areas where it matters, health care, child care, energy, food, shelter (seems to have topped out now somewhat). Keeping the criminal QE charade going and racking up more debt will make it worse. Prices need to come down significantly. The more debt this country and its citizens take on the more violent will be the reaction when rates just increase by a notch.

QE in 10 years time will be seen as a generally wasteful measure that failed to obtain any long lasting stability.

16   chanakya4773   ignore (1)   2013 Jul 7, 9:03am     ↓ dislike (0)   quote   flag        

robertoaribas says

you are utterly dreaming. There is a shortage of inventory at all price points in phoenix, up to about 500,000. 500K to about 2 million is fairly balanced; If you want to pay more than 2 million, there is more supply than there is demand. (most of the multi million dollar home owner have the strength to be very patient waiting for a buyer)

TODAY, instantly, buyers who are limited by loan to income ratios will have to buy a little less expensive home. That doesn't change a thing about what homes are for sale.

i am not talking about current inventory levels. i was just disputing the assertion that increasing interest rates will only effect ( if at all) high end and now low end.

17   chanakya4773   ignore (1)   2013 Jul 7, 11:12am     ↓ dislike (0)   quote   flag        

robertoaribas says

you postulated a drop from 250K to 150K.

Dude , it was just an example ( not real numbers). looks like you are too sensitive to this topic :-)
i just used some numbers to show that a drop in high end price puts pressure on low end as well. there is a domino affect. all housing segments get affected by the overall trend. when that will happen is another discussion.

18   AD   ignore (0)   2013 Jul 7, 11:36am     ↓ dislike (0)   quote   flag        

robertoaribas says

you postulated a drop from 250K to 150K... A 40% price drop, based on what a 13% payment increase due to interest rates?

Roberto, one statistic you have to look at Cost to Income ratio.

That is the cost (Mortgage, Tax, Insurance, Maintenance, minus Mortgage Interest deduction) as a % of household income. The alternate is rental cost if one decides to rent and not purchase a home.

The neutral zone is around 33 to 38% of net household income.

For Phoenix, what is the statistic now for a median household salary ?

19   Goran_K   ignore (4)   2013 Jul 7, 12:49pm     ↓ dislike (1)   quote   flag        

Homeboy says

Goran_K says

Wow, one of the worst ownages on this website. LOL

Is that why it got 7 "likes", bitch? Ha ha. As usual, you don't know what the fuck you're talking about, Goran.

Umm I was agreeing with you. I was one of the 7 likes.

20   Homeboy   ignore (2)   2013 Jul 7, 1:02pm     ↓ dislike (2)   quote   flag        

Goran_K says

Umm I was agreeing with you. I was one of the 7 likes.

Oh my god. Sorry. You said "worst", so I thought you were insulting me and was offended. I'm gonna delete my assholish response, then. I apologize.

21   JodyChunder   ignore (3)   2013 Jul 7, 1:14pm     ↓ dislike (0)   quote   flag        

Things still look mighty fine for my investments here in Victorville...still eating lobster thermidor for breakfast, still wearing $50 dollar silk shirts...

22   chanakya4773   ignore (1)   2013 Jul 7, 2:15pm     ↓ dislike (0)   quote   flag        

most rates are approx 5% for jumbo loans with zero points and no fees.
This is big jump. The home prices will cool down by next summer in most of US. in bay area, there is a mini bubble going on so can't guess the top.
Case shriller index has already reached its historic trend so what do we expect anyways ?
congrats to all who bought with +ve cash flow and are getting more than 7% return on their investment ( initial down). i am guessing +ve cash flow
on most houses will be a thing of the past.
people who bought with mediocre/bad cashflow/returns but speculating on continued capital appreciation in mind will not be sleeping well as rates keep rising and home prices go down or stagnate.

23   evilmonkeyboy   ignore (0)   2013 Jul 7, 2:59pm     ↓ dislike (0)   quote   flag        

robertoaribas says

evilmonkeyboy says

buy bonds right now. Perfect buying opportunity, right?

crossed my mind, but I don't see much upside. Even if rates settle half way back to their prior low, I'd make some money; the other side of that trade has far more room to run! I'd have to be right 5 out of 6 times on that level of gamble to make it a positive expectation!

So your saying that the bond market may not have over reacted?

24   RealEstateIsBetterThanStocks   ignore (0)   2013 Jul 7, 3:00pm     ↓ dislike (2)   quote   flag        

JodyChunder says

lobster thermidor

really how come your apartment have water damage on the wall?

25   JodyChunder   ignore (3)   2013 Jul 7, 3:28pm     ↓ dislike (0)   quote   flag        

Mark D says

really how come your apartment have water damage on the wall?

Que?

You mean the blood stains?

26   bmwman91   ignore (1)   2013 Jul 7, 3:41pm     ↓ dislike (0)   quote   flag        

Mark D says

really how come your apartment have water damage on the wall?

I'd be surprised if that was actually him in the photo.
http://www.abc.net.au/news/2006-02-03/pm-says-awb-photos-very-unhelpful/791296


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