Fed raised the rate 1/4....economists believe mortgages will be 1% higher by the end of the year. That means all you guys out there with your ARMs could be paying an extra $200 bucks a month on your 240k mortgages. And we all know at least half the people out there got ARMS so they could pay the maximum payments they could afford to get the maximum amount of house...200 bucks a month will hit a lot of people hard...can you say "forclosure"?
Your $240,000 mortgage is not very realistic for CALIFORNIA. I would say double that figure. And more to the point, 2/3'rds of the people in the San Francisco Bay Area are holding "interest-only" mortgages . . . The "interest-only" mortgages are the current rage across the Nation. Good Luck people. When the music stops, where's your Chair?
Right now I would be more concerned with the people taking all the equity out of their home through a HELOC. That ARM increases directly with the prime or libor rate. There is no lag on that product as opposed to a 3/5/7 year ARM as your 1st mortgage. People these days have little to know savings. If times get though or as things get to expensive then people will have to sell. If the middle class can't sustain the bubble it will be a mass exodus. I think most of us can agree that it is not a question of if but rather when.
Well i was using 240k as a nationwide average...you know...90% of the population of the US, doesnt live in california
but... 90% of the population live in the major cities or in the surrounding areas... ever see a population map the little dots representing population clusters are always around the big cities (usually near the coastlines)
90% of the population may live in major cities but 90% doesnt live in 500k homes. The median home price IN the USA for 2004 was 221k up from 187K a year earlier....so since we are in the middle of 2005 i guessed 240k as a median home value for now. So if median is at 240k and interest rates go up a point its very safe to say that alot of people with ARMs are going to be paying 200 bucks a month extra by the end of the year Even with interest only ARMs.
Wow wasn't higher rates predicted when Feds Funds was at 1%? DOOOOM! Crash! 10 year dropped 5 basis points to 3.945%
Thats a good analogy....because most of the people have to lose money for the few to get really rich So if most of the people dont believe in the few doomsayers.....