Record Low 30 Year Mortgage Rates!!! This is getting to be a joke.

Discussion in 'Economics' started by S2007S, Oct 7, 2010.

  1. S2007S

    S2007S

    Got to love intervention in the market place, no such thing as a free market what so ever as 30 year mortgages continue to plummet to help everyone still holding onto a house get some bit of relief. You can thank bubble ben bernanke and the magic tricks he pulls out of his large hat for these beautiful low interest rates. He thinks by creating lower rates it will create more demand for housing as well as the chance for millions to go refinance at a lower rate to throw more money that their not spending in mortgages back into the ever slowing economy. Because that's the way bubble ben bernanke thinks is going to save the economy from falling apart. This might be good for people buying houses now but once this pathetic nonsense stops and rates start to finally push higher you will see the negative impact on real estate moving out over the next 10 years or so. This isnt the way to place a bottom in housing, the real way is to let the markets decide where the bottom is, the more intervention within the market place the more fucked this economy gets moving forward, once again thank you bubble ben bernake, you really know how to prop up a failing economy.



    Record Low 30 Year Mortgage Rates
    Posted by dianesteele on Oct 7 2010
    Protest against the Federal Reserve in Minneap...

    Record Low 30 Year Mortgage Rates Image by Wikipedia

    The average 30 year mortgage rate has stayed the same this week. This is in line with the record lows that have been recorded this week. The average rate stays at 4.5% according to Bankrate.com’s weekly national survey. The 30 year fixed mortgage retains an average of .36 discount and origination points.

    The average 15 year mortgage rate however went down to 3.94% and the jumbo 30 year fixed rate came down to 5.16%. Mortgage rates that are adjustable also hit new lows. The average 5 year ARM came down to 3.68% and the average 7 year ARM fell to 3.91%.

    The cause of the rates falling has been attributed to the Federal Reserve’s efforts to revive the economy and not because of poor economic data. The efforts of the Federal Reserve have been pushed by investors demand on the Reserve to continue quantitative easing of purchases of government bonds which will bring the rates even lower.

    Investors are now buying government debts which are bringing bond yields to record lows. Rates are known to move proportionally to yields on long term government bonds. This was not the case this week however.

    As at November 2008 the mortgage rates were above 6%. The average rate then was 6.33%. this is a significant reduction as loans of $200,000 now carries monthly payment of $1,013.37 instead of $1,241.86.

    Bankrate’s survey showed the following results: the 30 year fixed rate at 4.5%, the 15 year fixed rate at 3.96% and the 5/1 ARM at 3.68%.

    Bankrate does its national weekly surveys on Wednesdays from data that it takes from the top 10 banks and thrifts in the top 10 markets. The survey is normally complimented by the Bankrate’s weekly Trend Index in which experts forecast the rate figure for the next seven days.
     
  2. What's next? Maybe the "bank gives you money and pays you interest on it" loans....courtesy of the U.S. taxpayer and incredibly indebted future generations.

    The refi game is like the house flipping game about 5 years ago. The longer you wait, the better the deal...until there are no more deals.
     
  3. The housing market will not recover until they bring back the 20% down, no doc/low doc loans.

    A lot of people out there would actually buy and take property off the banks' hands if the idiots wouldn't be so stupid now & not make those loans.

    I'm NOT talking zero down. But why not bring back the 20% down/ Alt A mortgages which were successful for many years?
     
  4. S2007S

    S2007S

    I know some banks now want to see at least 2 years of tax returns, pay stubs and also making sure you have over 20% to put down. Rules have gotten really tight. With that being said how many are actually going to benefit from these historical low mortgage rates, the answer is not many at all.
     
  5. What happens to the banks, though, if rates skyrocket one day (think 1970s) and everyone is paying back their mortgage at a 3%-6% rate?

    Another bank bailout? That's my guess, at least for the "too big to fail" ones. The small ones would get thrown under the bus. It would be ugly, though, and I don't know how many more crises like that we can handle before the house of cards comes down.
     

  6. This is exactly right. Take it from a person inside the mortgage industry (me).

    Why the housing market will have a very difficult time recovering:

    1) Before the banks got stupid and started giving 80/20 combo, zero down loans to people with 620 credit scores on Stated Income/Stated Assets, the Jumbo/Stated (verified assets) market was THE best performing portfolio with the lowest default rate of all for decades, even better than pure Full Doc.

    This has always been the loan needed for high net worth, business-owning borrowers with complex taxes because it is tough to decipher their returns - but you could believe they made $10k or $20k per month if they Stated it because you could verify their $100k or $200k in cash assets. They would always put at least 10% down if not more on a $500k house - $50k+ is a lot of skin in the game.

    And make no mistake, these are the buyers that support a housing market, not people flipping $80k or $120k houses over and over like we have now. We are selling the same house 3 times to equal the same revenue that used to flow through the mortgage finance pipeline. This is why "affordable housing" initiatives are market killers (the only thing that this Congress/President have tried to do to stimulate housing)

    These are the high-end people that are almost completely frozen out of the housing market now. I have had several literal millionaire clients over the last 2 years that can't get a mortgage, but some loser with no money and a 3 month job's paystub can get a cheap FHA loan.

    This is the main reason why housing prices continues to dive - because there is simply no one that can get a Jumbo Full Doc loan. People who can do Full Doc with a paystub and W-2's are few and far between and there are only so many rich cash buyers/investors.

    If no one can get a Jumbo loan, then every house over the Conforming Full Doc limit of $417k is doomed to drop in value. And FHA loans only go to about $262,500 in most areas.

    Congress, in their stupidity, as part of the Financial Responsibility Act, has now etched in concrete that all mortgages from now on must be in the tiny Full Doc box. They have doomed the housing finance system indefinitly.

    You cannot lift a housing market (or any market) from the bottom up. The market is too heavy to lift that way. It has to be a stronger top of the price range pulling up the bottom. A rising tide lifts all boats. The lower end of the economic caste does not a healthy market make.

    And that is what left-wing dumbfucks out there in the world don't understand. Why every giveaway and entitlement to the lower classes only serves to drag down the prosperous and does not creat anything but dependency and less future opportunity for the lower income folks.
     
  7. Interesting, never thought of that

    So howcome we don't see a higher depreciation in prices of luxury homes priced over $417K?

    How do you explain that?
     
  8. In an prior time such rules/qualification were called "prudent", "common sense".
     
  9. 377OHMS

    377OHMS

    I'm looking at refinancing to a 15-year @ 2.99 APR.

    Everything is out of whack. My homes tax assessment has dropped twice, I've refinanced twice to lower rates. My homeowners insurance is now about 20% what it was at time of purchase (California fair value plan, you decide how much insurance to carry, not the bank). My payment is about half what it was when I bought my home.

    The bank appraised value keeps increasing. I don't think the appraisal system has been reformed at all here. The banks seem to accept any stupid value an appraiser submits. You would think the banks would have become more skeptical. Not so.

    The fed better raise rates before the whole system unravels. I don't think free money is the right solution.
     
  10. That sounds great on TV, but have any of you called around to your local banks to get rates. We have ~ 9.5 years, which I debate just paying off, but with a 4.75% rate from a few years ago, I have held off. I called to see what would be available, and the rates plus fees make it not worthwhile. I can get 3.75 on a 10 year, but they aren't willing to go any lower for shorter terms. I may just pay it off, but I see to many deals on some dividend paying stocks with tons of cash on hand that I find it hard to pull my cash out.
    I give the banks credit for finally deciding to make money, but what a frickin irritant to not be able to grab a dirt cheap rate because they are now figuring out they need to make money, and are playing a huge spread at my expense.
    On the other hand, there are quite a few properties in my neighborhood that I could jump on for a pretty cheap price, and I feel fairly safe I could turn a profit on in a few years at most. At the same time I get the impression there are tons of properties that haven't been foreclosed on due to document backlogs and isusses with banks that may mean we have another drop in proprety values coming that I hesitate to grab land now.
     
    #10     Oct 8, 2010