How low can we go? 30 yr fixed at 3.75% with no fees...

[usctrojancpa]

I suggest everyone go watch Larry Summers' latest interview with Bloomberg as he has been more correct than anyone and had teh courage to tell a Dem POTUS he was blowing up inflation. The Fed won't stop until we have positive real rates, and they don't look at CPI but PCE which is STILL RISING.

And that low 5's jumbo comes with fees and very strict underwriting that will eiminate many borrowers that lack high W2 income.

Accessible loans will get to 9% if not 10.

Those jumbo rates are without any points and do not include any relationship discounts. Rates won't get the 10% because inflation is beginning to roll over now as things are slowing down. The Fed may take rates into the 5%s but the higher they go on the Fed funds rate the lower the push lower terms rates and that will put pressure on mortgage rates. If we get inflation going negative because we are in a recession the Fed will be cutting rates which will probably take rates into the 3%s.

 

[OCtoSV]

Those jumbo rates are without any points and do not include any relationship discounts. Rates won't get the 10% because inflation is beginning to roll over now as things are slowing down. The Fed may take rates into the 5%s but the higher they go on the Fed funds rate the lower the push lower terms rates and that will put pressure on mortgage rates. If we get inflation going negative because we are in a recession the Fed will be cutting rates which will probably take rates into the 3%s.

That would be good for your business but the consensus I see across Wall St is we won't see rates even in the 4s ever again. Blackstone has subsequently limited redemptions in ther RE fund, and word is AH4Rent is starting to liquidate properties. WF announces massive mortgage staff layoffs yesterday. You would think they have a better crystal ball and would be holding on to staffers if rates were headed to the 4s let alone 3s. Maybe you have the right contrarian call here - we shall see.

I'd love to see a borrower profile of a successfully funded $1M loan in Irvine in the past 2 weeks vs 1 yr ago.

 

[usctrojancpa]

That would be good for your business but the consensus I see across Wall St is we won't see rates even in the 4s ever again. Blackstone has subsequently limited redemptions in ther RE fund, and word is AH4Rent is starting to liquidate properties. WF announces massive mortgage staff layoffs yesterday. You would think they have a better crystal ball and would be holding on to staffers if rates were headed to the 4s let alone 3s. Maybe you have the right contrarian call here - we shall see.

I'd love to see a borrower profile of a successfully funded $1M loan in Irvine in the past 2 weeks vs 1 yr ago.

Jumbo mortgage rates will be below 5% within the next 12-24 months, I'm confident of that. Of course mortgage lenders and real estate firms are laying people off, sales volumes are down by about 50% from last year which is caused by higher rates, low levels of inventory, and a widening bid/ask spread between buyers and sellers. None of those things will cause rates to go up, future expectations of inflation is a key driver of longer term rates including for mortgages. If the recession gets bad enough and the Fed is cutting rates, mortgage rates may get back into the 3%s.

 

[irvinehomeowner]

So weird that I am agreeing more with USC in recent years.

It will have to get to 10 within a year because like SGIP said... election time usually reduces interest rates.

Ultra low rates may be have "sailed" (what TI member incorrectly said that?) but the tides have bought them back before... I think double-digit rates are at the end of the ocean on the flat earth... so maybe Kyrie Irvine will find them.

 

[CalBears96]

Jumbo mortgage rates will be below 5% within the next 12-24 months, I'm confident of that. Of course mortgage lenders and real estate firms are laying people off, sales volumes are down by about 50% from last year which is caused by higher rates, low levels of inventory, and a widening bid/ask spread between buyers and sellers. None of those things will cause rates to go up, future expectations of inflation is a key driver of longer term rates including for mortgages. If the recession gets bad enough and the Fed is cutting rates, mortgage rates may get back into the 3%s.

I, for one, hope you're right about jumbo rates being below 5% with the next 12-24 months, but I think that's a bit optimistic. I would be happy if jumbo rates are in the 4s 24-36 months from now, because that's when I think the housing market will bottom out, and hopefully, that's when I'm going to get a chance to buy Cielo Plan 1. If jumbo rates drop into the 3s, even better, but I'm a bit doubtful that we'll ever see 3s again.

 

[OCtoSV]

Jumbo mortgage rates will be below 5% within the next 12-24 months, I'm confident of that. Of course mortgage lenders and real estate firms are laying people off, sales volumes are down by about 50% from last year which is caused by higher rates, low levels of inventory, and a widening bid/ask spread between buyers and sellers. None of those things will cause rates to go up, future expectations of inflation is a key driver of longer term rates including for mortgages. If the recession gets bad enough and the Fed is cutting rates, mortgage rates may get back into the 3%s.

I re-listened to the Larry Summers interview - you really need to open your aperture of information. Spreads for mortgages will widen as they will for all fixed income. MBS market is so bad they will demand higher mortgage rates. No Fed buyer - why would banks want to make low spread portfolio loans?

Your analysis and assertions never address the supply side of the mortage funding equation.

 

[usctrojancpa]

I re-listened to the Larry Summers interview - you really need to open your aperture of information. Spreads for mortgages will widen as they will for all fixed income. MBS market is so bad they will demand higher mortgage rates. No Fed buyer - why would banks want to make low spread portfolio loans?

Your analysis and assertions never address the supply side of the mortage funding equation.

I'm not talking about conforming loans, I'm talking about Jumbo loans. Jumbo loans are not based upon MBS bond pricing, they are based more upon banks' cost of capital plus a spread. Given where Irvine prices are, most buyers are using Jumbo loans (you just have to be $1 or $100 above to the confirming loan limit to be able to get a Jumbo loan). Then you can do a pay down after close and recast your mortgage payment if you want a lower loan amount. As long as banks have deposits they'll continue to make Jumbo loans so no issues when it comes to supply of cash from the banks.

 

[OCtoSV]

I'm not talking about conforming loans, I'm talking about Jumbo loans. Jumbo loans are not based upon MBS bond pricing, they are based more upon banks' cost of capital plus a spread. Given where Irvine prices are, most buyers are using Jumbo loans (you just have to be $1 or $100 above to the confirming loan limit to be able to get a Jumbo loan). Then you can do a pay down after close and recast your mortgage payment if you want a lower loan amount. As long as banks have deposits they'll continue to make Jumbo loans so no issues when it comes to supply of cash from the banks.

A reasonable explanation. Thanks.

 

[Cares]

I'm not talking about conforming loans, I'm talking about Jumbo loans. Jumbo loans are not based upon MBS bond pricing, they are based more upon banks' cost of capital plus a spread. Given where Irvine prices are, most buyers are using Jumbo loans (you just have to be $1 or $100 above to the confirming loan limit to be able to get a Jumbo loan). Then you can do a pay down after close and recast your mortgage payment if you want a lower loan amount. As long as banks have deposits they'll continue to make Jumbo loans so no issues when it comes to supply of cash from the banks.

It's not always the case that you have to be $1 above the conforming limit. There are jumbo lenders that lend at the conforming rate as I have lost business because the agency rates are no where close to jumbo at the moment.

 

[sgip]

It's not always the case that you have to be $1 above the conforming limit. There are jumbo lenders that lend at the conforming rate as I have lost business because the agency rates are no where close to jumbo at the moment.

Which Banks are funding Jumbo loans below standard conforming loan limits? (Sub $640k, not Sub $970k)?

Any thoughts on the impact of US Bank pulling out of 3rd Party (broker/correspondent) Lending? That's going to leave Chase and WF essentially as the only name brand banks funding correspondent loans, with Flagstar and I think Bank of The West being broker only outlets for many. Redwood Trust is a big Jumbo source, but not as competitive as a Bank. Perhaps as a non-bank they can find Conforming sized loans with Jumbo pricing.

 

[Liar Loan]

Jumbos are back at 6% similar to Oct/Nov levels.

Mortgage Rates Jump to Highest Levels in a Month

In the space of just two days, the average lender is nearly half a percent higher on a top tier conventional 30yr scenario.

 

[OCtoSV]

Jumbos are back at 6% similar to Oct/Nov levels.

Mortgage Rates Jump to Highest Levels in a Month

In the space of just two days, the average lender is nearly half a percent higher on a top tier conventional 30yr scenario.

View attachment 8941

Every day brings new data and the long term view keeps changing. I think now we're seeing the beginnings of the reversion of the inversion with long term rates edging higher and no end in sight to the terminal rate.

Key questions:
1. What level of unemployment is needed to halt rate hikes?
2. What level of unemployment is needed to initiate rate cuts?
3. What happens to housing prices in Irvine if rates stay where they are now or go slightly higher and stay there for the next 5 years? That seems to be a highly plausib;e scenario. Eventually there will be sellers - but with no buyers at current levels where will the market find equilibrium to return to normal sales volumes?

 

[irvinehomeowner]

That's the problem with rising rates. Everyone says that it should force prices down but there are many factors to consider.

Back when everyone used ninja ARMs, the prediction was the rising rates would create more sellers and foreclosures which really did not happen because the rate went down instead of up which results in people switching to fixed and a faster rebound.

Now that rates are going up, many are in fixed loans so less sellers and prices aren't really free falling because not enough inventory. Where does 20% drop take us? 2018? All the slowdowners back then said 2018 prices were too high so now they are the target?

Timing is not an exact science.

 

[CalBears96]

That's the problem with rising rates. Everyone says that it should force prices down but there are many factors to consider.

Back when everyone used ninja ARMs, the prediction was the rising rates would create more sellers and foreclosures which really did not happen because the rate went down instead of up which results in people switching to fixed and a faster rebound.

Now that rates are going up, many are in fixed loans so less sellers and prices aren't really free falling because not enough inventory. Where does 20% drop take us? 2018? All the slowdowners back then said 2018 prices were too high so now they are the target?

Timing is not an exact science.

20% drop from peak (Apr 2022) takes us back to Nov 2021. You would need 50% drop to get back to 2018/2020 levels.

 

[irvinehomeowner]

So 50% drop?

Yeah right. Don't think even LL would bet a $1 on that.

 

[Liar Loan]

That's the problem with rising rates. Everyone says that it should force prices down but there are many factors to consider.

Back when everyone used ninja ARMs, the prediction was the rising rates would create more sellers and foreclosures which really did not happen because the rate went down instead of up which results in people switching to fixed and a faster rebound.

Now that rates are going up, many are in fixed loans so less sellers and prices aren't really free falling because not enough inventory. Where does 20% drop take us? 2018? All the slowdowners back then said 2018 prices were too high so now they are the target?

Timing is not an exact science.

Irvine lost 28% precisely because there were more sellers (many of them short sellers) and a record number of foreclosures. This is an indisputable historical fact.

So 50% drop?

Yeah right. Don't think even LL would bet a $1 on that.

CareBears is going through the process of rationalizing the purchase of a home at the peak. If prices only fall to Nov 2021 levels, then it wasn't that bad of a decision, but if prices continue to drop past that, a new reason for why it was a good decision will have to be invented. All home buyers with remorse go through this same psychological process to some extent.

 

[irvinehomeowner]

Irvine lost 28% precisely because there were more sellers (many of them short sellers) and a record number of foreclosures. This is an indisputable historical fact.

That's a long way from the 50%+ drops the schadenfreude group was predicting... and never happened.

Here's yet another chance for you to finally get it right... what is your drop prediction **this** time? I don't think you voted higher than 20% on my poll.

 

[Liar Loan]

That's a long way from the 50%+ drops the schadenfreude group was predicting... and never happened.

Here's yet another chance for you to finally get it right... what is your drop prediction **this** time? I don't think you voted higher than 20% on my poll.

Your BIG LIE about 15% didn't happen either, so let's at least be honest about that.

I've made so many predictions on TI and every one of them has been correct, but I make predictions based on the data, not on people telling me to bark like a dog. Make your own damn prediction and let's see you defend it. I'm sure you won't.

 

[Mawesome Sauce]

Just want to point out that if property prices aren’t falling enough with higher rates, it just means rates aren’t high enough. If rates go high enough, investors will sell homes and buy bonds for tenant stress free yield vs rent. This is something I don’t think the fed wants to do on an election year, so we may see a short term bottom this year

 

[sleepy5136]

Just want to point out that if property prices aren’t falling enough with higher rates, it just means rates aren’t high enough. If rates go high enough, investors will sell homes and buy bonds for tenant stress free yield vs rent. This is something I don’t think the fed wants to do on an election year, so we may see a short term bottom this year

do you think rates aren't high enough? or is it because more than half of mortgages are either paid off or have rates under 4% putting pressure on available inventory?