Interest Rates

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ConsiderAgain_IHB

ConsiderAgain_IHB

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I thought an interest rate thread may become relevant given Well Fargo is showing 30-yr fixed jumbos at 9.176% (hat tip to Calc. Risk).



BofA is quoting 7.9% for the same.



Is this the hammer that will drive down prices if everyone follows Wells? Given that IR postulates home prices will overshot to the down side, will interest rates do the inverse to the upside? The risk associated with <a href="http://www.ocregister.com/articles/soni-washington-mutual-2163800-sonis-family"> some of the loans issued over the past few years</a>, 9.2% hardly seems worth it.



The bailout is going to be bad news as the pain is spread around to those not deserving it. Higher interest rates now is like closing the barn door after the horses left.
 
[quote author="ConsiderAgain" date=1222236532]I thought an interest rate thread may become relevant given Well Fargo is showing 30-yr fixed jumbos at 9.176% (hat tip to Calc. Risk).



BofA is quoting 7.9% for the same.



Is this the hammer that will drive down prices if everyone follows Wells? Given that IR postulates home prices will overshot to the down side, will interest rates do the inverse to the upside? The risk associated with <a href="http://www.ocregister.com/articles/soni-washington-mutual-2163800-sonis-family"> some of the loans issued over the past few years</a>, 9.2% hardly seems worth it.



The bailout is going to be bad news as the pain is spread around to those not deserving it. Higher interest rates now is like closing the barn door after the horses left.</blockquote>


It's all about the risk premium. The stuff the Fannie and Freddie will not insure will see interest rates rise to their natural market levels.



For anyone who is renting right now, higher interest rates are the best thing that could happen. High interest rates translate into low prices which is a perfect buying opportunity. You can refinance into a lower interest rate, but you can't refinance into a lower debt.
 
[quote author="IrvineRenter" date=1222237809]

It's all about the risk premium. The stuff the Fannie and Freddie will not insure will see interest rates rise to their natural market levels.



For anyone who is renting right now, higher interest rates are the best thing that could happen. High interest rates translate into low prices which is a perfect buying opportunity. You can refinance into a lower interest rate, but you can't refinance into a lower debt.</blockquote>


True, and that premium has not been applied over the past six yrs, hence the mess we are in. If F&F were left alone to fail, interest rates would have sky rocketed and house sales would have slowed, and house prices would have dropped accordingly.



People only have so much to spend on mortgage, composed primarily of loan principal and interest. If one goes down, the other rises. We see this now in bubble home prices and low interest loans. Going back to the bad ole Carter days of 10+% mortgages, home prices were in the toilet.



The bailout is going to prolong the pain, drag-out the correction, and keep the renters renting for several years longer than they otherwise would have.
 
I want a 15 handle on Jumbos. I also can't wait for the conforming limit to drop down a bit on Jan 1. Pity the poor Irvine SFR buyers.



Not.
 
[quote author="effenheimer" date=1222244963]I want a 15 handle on Jumbos. I also can't wait for the conforming limit to drop down a bit on Jan 1. Pity the poor Irvine SFR buyers.



Not.</blockquote>


They'll extend the jumbo-conforming expiration deadline. Hell, they took over F&F so they could keep the loans free flowing. You think they won't pump that expiration out to 12/31/09 or later?
 
Looks like jumbo-conforming rates have ticked up .25-.375 since last week. I am seeing 6% on 30-year JCF with no points. All ya gotta do is stay below the magic number...
 
<img src="http://punditkitchen.files.wordpress.com/2008/09/political-pictures-alan-greenspan-inflation-mighty-interest-rates.jpg" alt="" />
 
[quote author="ipoplaya" date=1222260445][quote author="effenheimer" date=1222244963]I want a 15 handle on Jumbos. I also can't wait for the conforming limit to drop down a bit on Jan 1. Pity the poor Irvine SFR buyers.



Not.</blockquote>


They'll extend the jumbo-conforming expiration deadline. Hell, they took over F&F so they could keep the loans free flowing. You think they won't pump that expiration out to 12/31/09 or later?</blockquote>


Are there any other signs that they'll be extending the conforming jumbos for awhile? I would have thought that with the lack of credit in the market, the conforming jumbo would go the same way of the dodo. I suppose, though, that more important than the availability of the loan is the credit history of the person to which it is given, which is under more scrutiny these days. (I'm looking to purchase a house, and the jumbo conforming would remain within my range of fiscal responsibility, as dictated by the wise inhabitors of this blog.)



Thanks
 
[quote author="ConsiderAgain" date=1222239511][quote author="IrvineRenter" date=1222237809]

It's all about the risk premium. The stuff the Fannie and Freddie will not insure will see interest rates rise to their natural market levels.



For anyone who is renting right now, higher interest rates are the best thing that could happen. High interest rates translate into low prices which is a perfect buying opportunity. You can refinance into a lower interest rate, but you can't refinance into a lower debt.</blockquote>


True, and that premium has not been applied over the past six yrs, hence the mess we are in. If F&F were left alone to fail, interest rates would have sky rocketed and house sales would have slowed, and house prices would have dropped accordingly.



People only have so much to spend on mortgage, composed primarily of loan principal and interest. If one goes down, the other rises. We see this now in bubble home prices and low interest loans. Going back to the bad ole Carter days of 10+% mortgages, home prices were in the toilet.



The bailout is going to prolong the pain, drag-out the correction, and keep the renters renting for several years longer than they otherwise would have.</blockquote>


I couldn't agree more. This is exactly what a couple of my buddies and I talked about well before they passed the bailout. I hate the fact that our gov is tampering with the markets. It could be a decade before we find out the true price of housing because of this. Bad debt needs to be marked to market and let buyers/sellers the true market decide where we are at.



Would it be painful? sure...but we can start recovering faster too. But whatever...I'll just hold on to my cash and buy when my calcs tell me that my rent costs are now equivelant to buying.
 
[quote author="ipoplaya" date=1222260623]Looks like jumbo-conforming rates have ticked up .25-.375 since last week. I am seeing 6% on 30-year JCF with no points. All ya gotta do is stay below the magic number...</blockquote>


Jumbo conforming 30-year now quoting at 6.625% with no points from my normal source. Mortgage rates up almost a full point over the past three weeks or so...
 
[quote author="ipoplaya" date=1224106331][quote author="ipoplaya" date=1222260623]Looks like jumbo-conforming rates have ticked up .25-.375 since last week. I am seeing 6% on 30-year JCF with no points. All ya gotta do is stay below the magic number...</blockquote>


Jumbo conforming 30-year now quoting at 6.625% with no points from my normal source. Mortgage rates up almost a full point over the past three weeks or so...</blockquote>
This could be the thing we need to give Irvine RE another step down in pricing.
 
[quote author="usctrojanman29" date=1224108176][quote author="ipoplaya" date=1224106331][quote author="ipoplaya" date=1222260623]Looks like jumbo-conforming rates have ticked up .25-.375 since last week. I am seeing 6% on 30-year JCF with no points. All ya gotta do is stay below the magic number...</blockquote>


Jumbo conforming 30-year now quoting at 6.625% with no points from my normal source. Mortgage rates up almost a full point over the past three weeks or so...</blockquote>
This could be the thing we need to give Irvine RE another step down in pricing.</blockquote>


And looky there, the yield on the 10-year is up big again today... Rates will revise up again today/tomorrow. I hate to see high mortgage rates, but it's that's the catalyst to another 15% drop in RE prices, I'll take it.



On my target house, a 15% drop in price with 8% interest rate is still better than prices today with a 6.5% mortgage.
 
Today Wells topped 10% for their 30-yr, non conforming (10.061%). Nothing Earth shattering other than this is the first double-digit mortgage rate from a mainstream bank I have seen in my adulthood. I am expecting other banks to eventually follow Well's lead in mortgage rates.
 
[quote author="ipoplaya" date=1224114223][quote author="usctrojanman29" date=1224108176][quote author="ipoplaya" date=1224106331][quote author="ipoplaya" date=1222260623]Looks like jumbo-conforming rates have ticked up .25-.375 since last week. I am seeing 6% on 30-year JCF with no points. All ya gotta do is stay below the magic number...</blockquote>


Jumbo conforming 30-year now quoting at 6.625% with no points from my normal source. Mortgage rates up almost a full point over the past three weeks or so...</blockquote>
This could be the thing we need to give Irvine RE another step down in pricing.</blockquote>


And looky there, the yield on the 10-year is up big again today... Rates will revise up again today/tomorrow. I hate to see high mortgage rates, but it's that's the catalyst to another 15% drop in RE prices, I'll take it.



On my target house, a 15% drop in price with 8% interest rate is still better than prices today with a 6.5% mortgage.</blockquote>
I think the 10-year bond rates are heading to 4.50-5% by year-end, especially with all the new issuances the FEDs need to liquidify the system. I'm glad my buyer got a sub-6% loan and I was able to get away when I did. Sometimes it's better to be lucky than good. ;)
 
10.478% APR Dohhhh!!!



https://www.wellsfargo.com/mortgage/buy/tools/rate_calc_results/



Select a loan type to view the details.



Mortgage Solutions as of 10/17/2008 10:26 AM Eastern Loan Type Interest Rate1 APR2 Payment



<strong>30-Year Fixed Rate 9.875% <span style="color: red;"><span style="font-size: 13px;">10.478%</span></span> $4,604.25 </strong>

15-Year Fixed Rate 9.250% 9.670% $5,345.97

10/1 ARM 9.625% 9.263% $4,512.45

5/1 ARM 8.000% 7.461% $3,931.33
 
[quote author="morekaos" date=1224279033]10.478% APR Dohhhh!!!



<a href="https://www.wellsfargo.com/mortgage/buy/tools/rate_calc_results/">WellsFargo</a>



Select a loan type to view the details.



Mortgage Solutions as of 10/17/2008 10:26 AM Eastern Loan Type Interest Rate1 APR2 Payment



<strong>30-Year Fixed Rate 9.875% <span style="color: red;"><span style="font-size: 13px;">10.478%</span></span> $4,604.25 </strong>

15-Year Fixed Rate 9.250% 9.670% $5,345.97

10/1 ARM 9.625% 9.263% $4,512.45

5/1 ARM 8.000% 7.461% $3,931.33</blockquote>


I just looked it up it shows much lower...

Loan Type Interest Rate1 APR2 Payment

40-Year Fixed Rate 7.250% 7.627% $2,685.36

30-Year Fixed Rate 6.375% 6.684% $2,622.15

15-Year Fixed Rate 6.000% 6.295% $3,452.10

10/1 ARM 6.625% 6.817% $2,687.92

5/1 ARM 6.250% 6.552% $2,589.54
 
[quote author="morekaos" date=1224285436]Punch in actual values for the loan. I used $600,000.00 home value with a $500,000.00 loan amount on a purchase loan</blockquote>


Those are true jumbo rates. Wells doesn't ask for the county, just puts the disclaimer about maybe having lower rates under $729K:



<img src="http://www.ipoplaya.com/wfjumbo.jpg" alt="" />



I did $700K loan on $1M purchase
 
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