What Happnes when we see 9 or 10 percent mortgage rates

Discussion in 'Economics' started by lasner, Nov 29, 2009.

  1. jprad

    jprad

    Several reasons.

    Going in, there wasn't a real estate bubble to drive prices well beyond reality.

    You also didn't have legions of people who couldn't afford their mortgage back then. Not only did you have to prove you could pay back what you borrowed, you had to put down a serious chunk of change upfront.

    Low turnover. Few people were eager to flip into a new house with an interest rate that was 2-3 times their current mortgage.
     
    #11     Nov 29, 2009
  2. Thats why people buying now are screwed. They are buying inflated prices with all time low interest rates.

    Sooner or later, and it doesn't matter when, 3 years, 5 years, 10 years rates will be up to 8-10% and housing will be much lower.

    You buy when rates are high and prices low. You sell when rates are low and prices high.
     
    #12     Nov 29, 2009
  3. 377OHMS

    377OHMS

    9% was a good mortgage back in the Carter days.
     
    #13     Nov 29, 2009
  4. jprad

    jprad

    It was still a good rate late in Reagan's second term...
     
    #14     Nov 29, 2009
  5. ammo

    ammo

    the houses are only worth what the bank will lend, and right now they are not willing to finance any more real estate risk, still waiting for the other shoe to drop,saving their cash so they will still be in business, banks used to be in the business of saving
     
    #15     Nov 29, 2009
  6. lasner

    lasner

    that's exactly right....it's so funny realtors tell me to buy now because interest rates are low....it's the worse time to buy
     
    #16     Nov 29, 2009
  7. lasner

    lasner

    I was too young back then but I'm assuming nobody bought back then...and nobody sold unless they had to. I can't imagine anyone buying a house a normal price at a 20% mortgage rate
     
    #17     Nov 29, 2009
  8. jprad

    jprad

    The FRM segment of the market certainly took a big hit, but ARMs were pretty popular back then.

    It was just as bad for the new car market. Leasing became a big time alternative to purchasing.
     
    #18     Nov 29, 2009
  9. jprad

    jprad

    Fed policy and it's impact on the dollar over the next 5 to 10 years will most likely render conventional wisdom moot.
     
    #19     Nov 29, 2009
  10. jprad

    jprad

    I said EARLY 80's you farkin' twit...
     
    #20     Nov 29, 2009