momopi
Well-known member
Must... resist... clicking on like...
And I don't think mortgage rate "could" go to 8% - I think we're already on our way there.
How high will mortgage rates climb in the next 36 months?
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Must... resist... clicking on like...
And I don't think mortgage rate "could" go to 8% - I think we're already on our way there.
I listen to what everyone has to say, especially in a forum like this where we’re a little community and everyone is smart. I combine these viewpoints with what I hear from the various asset mgrs on Bloomberg and synthesize my views with an effort to be blind to my biases.
I don't know if Powell is the smartest guy ever. It seems to me that "transitory" was a major error and showed just how pervasive groupthink was at the top. He deserves credit for changing course even though it was a little late in the game.
You know that feeling of....I should have bought that house 10 years ago why did I wait?
Well I did buy a house 10 years ago and selling it feels wrong....
Is your advice to sell that house and put the proceeds into bonds?
The house has doubled in price, so long term cap gains is 15% upon selling.
Let's say it was $1,000,000 in 2013 and now it's $2,000,000 today.
How many hookers and how many pounds of blow can I get for a million dollars?
Forget about the 15% tax...I'd be dead before it came due.
I think you're right, the fed would like to target asset prices but they don't have the balls to come out and say so like Greenspan would have and if the 10 year can't rally again over the previous highs then mortgage rates from the builders (who are the ones selling in most areas that aren't built out) aren't going to 8% (I know resales are faced with that level). Plus I'll bet in the back of JP's mind is rising rates means higher interest the feds have to pay.
But OTOH you thought housing prices would collapse back down and even if mortgage rates do go to 8% from the builders, I don't think prices will drop like you think they will. Why do I say that? They didn't in 1981 (I know I bought a house then). It will be a time when you can get some reduced prices from distressed properties, some incentives from builders but the overall prices won't drop much as there is way too many people with lots of equity. Oh recession will do it you say? Unemployment was higher then than in 2008 and we didn't have bailouts then.
Now if the bond yields do march higher, I think the homebuilder stock prices will completely collapse and probably go thru their 52 week lows............ there is construction loans and selling little even if prices don't collapse is not good for earnings. lol!
Look at Lennar........... terrible looking chart. Why should a company selling in the low end do that? Isn't that the houses that are doing "well" for new home builders? I think it's because they have "everything included" so what incentives do they have other than rate buy downs for a group of buyers that is rate sensitive? Oh....... we'll upgrade flooring for ya? They were probably stretching and that ain't gonna get anyone qualified.
This chart shows the 25th percentile at about 710, so my guess is around 1/3 of originations are below 740.
Actually to qualify a conventional loan, you’ll typically need a credit score at least 620. That being said, once your credit score is below 740 there are "fee" adjustment points added as the credit score goes lower towards 620.
Must... resist... clicking on like...
And I don't think mortgage rate "could" go to 8% - I think we're already on our way there.
It’s only August 2023 and massive Treasury issuance is still to come. But USC said no way are rates going to 8% and no one believed me on spreads blowing out. Powell wants to crush RE speculation - this has been obvious if you listen to him. By far the sharpest guy in our lifetimes to run the Fed.
I listen to what everyone has to say, especially in a forum like this where we’re a little community and everyone is smart. I combine these viewpoints with what I hear from the various asset mgrs on Bloomberg and synthesize my views with an effort to be blind to my biases.
Liar Loan
Well-known member
I love how everybody that thought 7.5% rates were impossible are now hammering you because we aren't at 10% yet.
I don't know if Powell is the smartest guy ever. It seems to me that "transitory" was a major error and showed just how pervasive groupthink was at the top. He deserves credit for changing course even though it was a little late in the game.
sleepy5136
Well-known member
FYI I never said that. If anything I was the one that said rates going to 10% doesn’t even matter because unemployment is low and probably 60-70% of America have rates < 4-5%. No one is selling their homes unless they are forced to. If rates however go to 7.5 + X and that causes unemployment to rise…. Then we have a different story.I love how everybody that thought 7.5% rates were impossible are now hammering you because we aren't at 10% yet.
I don't know if Powell is the smartest guy ever. It seems to me that "transitory" was a major error and showed just how pervasive groupthink was at the top. He deserves credit for changing course even though it was a little late in the game.
zubs
Well-known member
You know that feeling of....I should have bought that house 10 years ago why did I wait?
Well I did buy a house 10 years ago and selling it feels wrong....
Is your advice to sell that house and put the proceeds into bonds?
The house has doubled in price, so long term cap gains is 15% upon selling.
Let's say it was $1,000,000 in 2013 and now it's $2,000,000 today.
How many hookers and how many pounds of blow can I get for a million dollars?
Forget about the 15% tax...I'd be dead before it came due.
Last edited:
sleepy5136
Well-known member
That depends if it's a primary or rental. If it's rental, the renter pays for the taxes and on top of that I get to use the tax codes to pay very little to no tax for rental income and the tenant is paying the mortgage down. For primary you are still have mortgage interest and prop tax deduction at fed/state level.That’s roughly 7% annually on your money (rule of 72).. now take out annual property taxes, insurance and upkeep and you are probably back to the 5% raw 10 year bond yield. Six in on hand half a dozen inn the other.
Liar Loan
Well-known member
Last time demand for purchase mortgages was this low Waterworld was bombing in theaters and Bill Clinton hadn't yet won a second term!
www.cnbc.com
Mortgage demand from homebuyers drops to a 28-year low as interest rates soar
As a result, applications for a mortgage to purchase a home dropped 5% for the week and were 30% lower than the same week one year ago.
Mortgage demand from homebuyers drops to a 28-year low as interest rates soar
Mortgage rates jumped last week to the highest level in 23 years.
www.cnbc.com
Ready2Downsize
Well-known member
You could be right. But bond yields had the chance to recover the recent loss (or pull back if you think they are going higher) and they collapsed after JP spoke at Jackson Hole).
I think you're right, the fed would like to target asset prices but they don't have the balls to come out and say so like Greenspan would have and if the 10 year can't rally again over the previous highs then mortgage rates from the builders (who are the ones selling in most areas that aren't built out) aren't going to 8% (I know resales are faced with that level). Plus I'll bet in the back of JP's mind is rising rates means higher interest the feds have to pay.
But OTOH you thought housing prices would collapse back down and even if mortgage rates do go to 8% from the builders, I don't think prices will drop like you think they will. Why do I say that? They didn't in 1981 (I know I bought a house then). It will be a time when you can get some reduced prices from distressed properties, some incentives from builders but the overall prices won't drop much as there is way too many people with lots of equity. Oh recession will do it you say? Unemployment was higher then than in 2008 and we didn't have bailouts then.
Now if the bond yields do march higher, I think the homebuilder stock prices will completely collapse and probably go thru their 52 week lows............ there is construction loans and selling little even if prices don't collapse is not good for earnings. lol!
Look at Lennar........... terrible looking chart. Why should a company selling in the low end do that? Isn't that the houses that are doing "well" for new home builders? I think it's because they have "everything included" so what incentives do they have other than rate buy downs for a group of buyers that is rate sensitive? Oh....... we'll upgrade flooring for ya? They were probably stretching and that ain't gonna get anyone qualified.
I was right about rates while USC was right about the correlation between inventory and prices. Outrside of Irvine in other parts of South OC without cash Asian buyers I am seeing varying degrees of price declines. Lots of flippers out there left holding the bag on expensive hard money loans and HELOCs. Time is on my side for finding my South OC bargain. Remember, prices are set at the margins.
Liar Loan
Well-known member
We tend to talk about mortgage rates in terms of borrowers with perfect credit, but there are already many who can't get a mortgage for under 8%.
This week’s Freddie Mac’s average mortgage rate landed at 7.18%. A 41-point FICO deficit (699) increases your mortgage rate by nearly a full point to 8.125%. Freddie Mac’s weekly rate survey assumes a 20% down payment and excellent credit (defined as a 740 middle FICO score) but does not assume anything with respect to loan origination points.
Credit scores matter.
The ongoing home price ascent and the highest mortgage rates since the turn of the century are bad enough. Tandemly, a shrinking mortgage menu and the number of mortgage providers will limit consumers’ mortgage opportunities going forward. Nobody needs sunscreen when it’s raining. Right?
www.ocregister.com
Fannie Mae, Freddie Mac fixed rates hit 8% for qualified borrowers
A buyer with 20% down payment and 699 FICO score gets an 8.125% rate for a 30-year loan.This week’s Freddie Mac’s average mortgage rate landed at 7.18%. A 41-point FICO deficit (699) increases your mortgage rate by nearly a full point to 8.125%. Freddie Mac’s weekly rate survey assumes a 20% down payment and excellent credit (defined as a 740 middle FICO score) but does not assume anything with respect to loan origination points.
Credit scores matter.
The ongoing home price ascent and the highest mortgage rates since the turn of the century are bad enough. Tandemly, a shrinking mortgage menu and the number of mortgage providers will limit consumers’ mortgage opportunities going forward. Nobody needs sunscreen when it’s raining. Right?
Fannie Mae, Freddie Mac fixed rates hit 8% for qualified borrowers
A buyer with 20% down payment and a 699 FICO score gets an 8.125% rate for a 30-year loan.
www.ocregister.com
irvinebullhousing
Well-known member
Lenders, taking no chance. This will prevents Liar Loans 
Liar Loan
Well-known member
This chart shows the 25th percentile at about 710, so my guess is around 1/3 of originations are below 740.
usctrojancpa
Well-known member
Actually to qualify a conventional loan, you’ll typically need a credit score at least 620. That being said, once your credit score is below 740 there are "fee" adjustment points added as the credit score goes lower towards 620.
Liar Loan
Well-known member
Anybody care to update their predictions, @usctrojancpa?
On Wednesday, Federal Reserve officials surprised markets by signaling interest rates won’t fall as much as previously planned.
The tweak might be more important than it looks. In their projections and commentary, some officials hint that rates might be higher not just for longer, but forever. In more technical terms, the so-called neutral rate, which keeps inflation and unemployment stable over time, has risen.
This matters to any investor, business or household whose plans depend on interest rates over a decade or longer. It could explain why long-term Treasury yields have risen sharply in the past few months, and why stocks are struggling.
www.wsj.com
Higher Interest Rates Not Just for Longer, but Maybe Forever
On Wednesday, Federal Reserve officials surprised markets by signaling interest rates won’t fall as much as previously planned.
The tweak might be more important than it looks. In their projections and commentary, some officials hint that rates might be higher not just for longer, but forever. In more technical terms, the so-called neutral rate, which keeps inflation and unemployment stable over time, has risen.
This matters to any investor, business or household whose plans depend on interest rates over a decade or longer. It could explain why long-term Treasury yields have risen sharply in the past few months, and why stocks are struggling.
Higher Interest Rates Not Just for Longer, but Maybe Forever
Rate projections suggest many Fed officials see a rising “neutral rate,” which keeps inflation and unemployment stable in the long run.
www.wsj.com
sgip
Well-known member
.... a "strange surge in refinancing..." Strange, if you don't know your historical cycles. To me, it's starting to feel like late 2006, as the music began to dim and chairs were harder and harder to find.
www.cnbc.com
Weekly mortgage demand increases, driven by a strange surge in refinancing
Mortgage demand rose last week despite another increase in interest rates.
www.cnbc.com
Liar Loan
Well-known member
Refinances skyrocketed because they are comparing to the Labor Day shortened 4-day work week. The MBA tries to make a "seasonal adjustment" to smooth out the numbers, but always without fail, these huge jumps in activity occur as the result of holiday weeks..... a "strange surge in refinancing..." Strange, if you don't know your historical cycles. To me, it's starting to feel like late 2006, as the music began to dim and chairs were harder and harder to find.
Weekly mortgage demand increases, driven by a strange surge in refinancing
Mortgage demand rose last week despite another increase in interest rates.