This housing crisis is not over yet. ARMs resets are still going to be painful and many homeowners will probably be denied a refi since LTV is over 100% and rising due to depreciating home values. Would it be a fair statement to say as mortgage rates rise, the value of real estate decreases? Bernanke is talking tough to save the dollar along with running the printing presses to save Investment Banks, but he forgot about the American consumer, who is getting the shit kicked out of him by mass layoffs, high gas prices, and increasing mortgage interest rates. Another day in the Enron economy.
When I bought my first house, a very seasoned attorney was doing the paperwork. We managed to lock in on a big dip in the interest rates and my wife insisted we pay a bunch of points, bringing the rate down to 6.75%. The attorney looked at the rate, kind of stunned, and said: "Mark my words...you'll never, ever, see a lower rate again". SM
I paid 10.125 % for my first home in 1989, and thought I had a great deal! Anything around 6% is a bargain in my mind.
Anyone who bought a house in the 1980s knows today that interest rates still look like they are near great lows, however people buying there first house today look at rates from 1-3 years ago and see that 6% is high today. Rates I believe will continue to move higher, I see them as high as 7-8% over the next 2-3 years. Aside from that housing has years before it returns, there are still plenty of ARMS that are going to reset into 2010 and foreclosures have YET to peak. There is a 10 to 11 month supply of homes on the market, until that number comes down dramatically housing prices will continue to fall as it takes years before the housing market finally turns around. Also pay attention to mortgage applications, they dropped about 15%, a 6 year low.
I think the banking industry is terminally stupid. "Let's see, more and more people can't make ends meet and are defaulting on their loans. I know! Let's jack up the rates higher so that even more people default making an already unbearable housing market even worse!" High fuel prices + no more atm machines in American's #1 asset (homes) + tapped consumers - rampant inflation - pay increases not keeping up with the fubar cpi + higher interest rates = joe blow is about to hit the curb. This is all gonna end very badly before it gets any better.