Mortgage Rates Rising

[jiacinto]

What affect will this have on the economy and the housing boom?

[Yavin4]

1. Ummm Bad. Really, Really, Bad

Remember what became of the dot coms? Well the same thing will happen to the housing market. What happened is that Greenspan, in an attempt to prop up Bush, cut rates to their lowest level in 40 years. This has created a major housing bubble, and now that bubble is about to burst.

[Brian Sweat]

41. I am afraid you are correct.

People have been buying houses like crazy for the last few years and this has been helping to prop up the otherwise sagging economy. Many people have bought houses in the last few years, who otherwise would have probably waited a few years. As a result, the potential customer pool has been drained. Now, with mortgage rates rising, there are going to be very few people in the market for homes for a couple of years. Housing sales and, more importantly, new housing starts are about to go into the toilet just as other sectors of the economy might be starting to pick up. Nothing like a tripple dip recession.

Most importantly is that Brian Sweat works in the IT division of a large company that has been drawing a large portion of its revenue from the mortgage business. Higher mortgage rates combined with the off shore flight of IT jobs could have severe economic implications for Brian Sweat. Congress needs to act now. :)

[wuushew]

2. What does it mean if anything?

Expectation that they can't go any lower, the economy will get better or just plain greed?

[unblock]

3. last gasp for refi

people who have waited to refinance now will, as they realize rates will not go any lower. then, as rates stagnate or rise, refis will come to an abrupt halt.

housing prices will similarly stagnate, or, in some areas, reverse.

the economy will hit the skids as consumers no longer feel flush with housing wealth and home equity.

fortunately, this in turn keeps rates from rising too quickly, which keeps this painful process in check. but, certainly the boom days of 15% annual housing price increases are behind us.

[ScreamingMeemie]

4. As I posted before under the bubble bursting thread,

the trouble's been there. Builder's unable to sell homes. Appraisers like me unable to bring them in at the value desired so people can get money out to stay afloat. People who over mortgaged homes already unable to sell them at the price they need, because they have no equity....and then foreclosure, which is already rampant in this town.

[Kathy in Cambridge]

7. What housing market are you in, MrsGrumpy?

Prices have leveled off here in the Boston area, but they're still outrageous. I'm waiting for the market to tumble like the condo bust of the late 80s here.

[ScreamingMeemie]

13. I am in the Detroit Metro/Southeast Michigan area.

We have some real problems here. Lack of infrastructure in communities that have been builder crazy. Huge taxes in the Grosse Pointes, with people who should have never bougth there in the first place. It's really a scary mess to watch first hand. Part of me wonders why I got into it in the first place. The other part knows it's good money and I get to be home with my kids, but I just can't bring myself to do foreclosure work.

[ulysses]

5. and just as I was getting ready

to buy that second home. Dang.

I'll have to get Al From to cosign on my boat now...

[jiacinto]

6. Did you know I went to high school with his daughter?

I am sure now that that will be used against me by the far left here.

[ulysses]

8. no, I didn't.

I don't see any reason for that fact to be used against you. Don't much care.

[jiacinto]

10. We were both on the forensics team

nt

[ulysses]

14. Great, CSI DC.

Meantime, her dad thinks that all my neighbors have boats in their back yards.

The reality is that none of them do. Nor are they likely to.

[jiacinto]

15. Public Speaking

That's what we did. Not CSI stuff.

[ulysses]

16. Duly noted.

I was a band geek in high school myself, so I don't know of such things.

Hey, do you think you could help me out with getting her dad to cosign on a loan for me?

[jiacinto]

18. I don't talk to her anymore

I haven't seen her for like seven years or more.

[DemoTex]

19. What did you play U?

Big band geek here. Ham radio geek to.

[ulysses]

21. trumpet

:) You?

[jiacinto]

24. I tried to play the trumpet

didnt' work out.

[ulysses]

28. gotta get the spit thing down.

[DemoTex]

26. Oboe in the concert band and orchestra. String bass in the jazz band.

Cymbals in the marching band. I saw my old band director two weeks ago. He had just come through quad-bypass surgery. We never got along when I was in HS. I call him by his first name now. Time heals.

[ulysses]

29. heh

It's a universal law that high school band directors have to be grade-A curmudgeons. I've never seen a human being inspire, at once, the kind of devotion and loathing that ours did. Our marching and jazz bands ruled the region for six years.

Mr. Brown, if you're hanging out out there, salut!

[tom_paine]

39. I didn't know you were a coroner, Carlos

:evilgrin:

I watched a lot of Quincy, ME, too, when I was a lad.

[TahitiNut]

9. Poor Carlos.

{sniff} Is that cross getting heavy? :nopity:

[Walt Starr]

11. ROFLMAO

Love that violin!

[DemoTex]

12. Oh, hell, it hit me between the eyes like a 2X4 today.

I am buying a mountain house in NC. My mortgage lender thought rates would drop this week. They jumped today. I had to lock-in at slightly over 6%, where yesterday was 5.75%. But, hey, with this war debt we will be seeing 14% mortgage rates before it's over. It's Vietnam redux, only quicker. Vietnam's economic impact was delayed until late Ford and all of the Carter years. We have a damnfool who wages war and slashes taxes. Look out housing market! Look out economy! Just look out!


The mountain house in NC. This will be our primary home as soon as our house in Dallas sells. Think I am not excited?

[bicentennial_baby]

17. Oh it's beautiful!!

You lucky dawg! Congrats to you & the missus!

[DemoTex]

23. Thanks. She is more excited than I am.

She always accused me of being a recluse. Now she realizes we will have far more house guests in a place in the mountains than in god-forsaken Dallas, Texas! Especially since most of our friends and family live within 2 hours of this mountain house.

[ScreamingMeemie]

20. Holy Cowabunga!!! Let us know when we can come visit.

It's gorgeous. Good luck!!!

[DemoTex]

27. Hey. DU party of all DU parties. Western, NC. Next spring.

This place is in the Nantahayla National Forest and is 2000 feet from the western boundry of NC's Gorges State Park (pristine hiking and fishing). It is, due to the land-grant from Duke Power to the State of NC, virtually George Bu$h rape-proof. Hell, we may even host a national DU party!

[Brian Sweat]

44. Is that anywhere near Robbinsville?

[whoYaCallinAlib]

22. No doubt, it won' t help.

Who would of thunk rates would go up????

[jiacinto]

25. Yeah

But they fell so low the only way they could go was up.

[stevebreeze]

33. rates were likly to go up as a result of the tax cut

Money has been flowing back into the stock market despite an evidence of rising profits. This has raised Price/Earnings back up to around 19, very high by historical standards. Money has been flowing into the stock market for the simple reason that stocks are now tax advantaged even more then before. Since it has a tax advantage it is more valuable as an asset.

Treasury bonds on the other hand have tanked. Less money has been bidding down the interest rate of government bonds, even as more government bonds are up for auction to cover the rapidly growing debt. Most mortgages are tied to government bonds and so interest rates have gone up fast.

Housing and refinance money have been the only thing propping up the economy. Since consumer spending is a larger part of the economy then corp investment, the harm outweighs the benefit.

This does not bode well for the economy.
:kick:

[Resistance Is Futile]

36. Blame Greenspan

The Fed has been playing games with the bond market and the increase in mortgage rates is the result. See http://www.safehaven.com/Editorials/mauldin/072603.htm for more details.

[Runesong]

30. Difficulty obtaining credit !

My wife and I have been having a hell of a time getting a loan to finance our new business. We have perfect credit. Our rating shows 11 accounts open/never late. Total non mortgage/auto debt less than $4000. We have tried several avenues. An SBA loan, personal loan, and applying for a few $2000+ mastercards. Nada.. What is going on? Is this a sign that the banks are expecting the economy to really tank? Iam I on some "list" because I emailed my senator? Is the interest rate so low, banks just don't want to lend money? What's going on?

[jiacinto]

31. Maybe you have too many credit cards open

Do you have any dept/retail chain cards? That could be a factor.

[ScreamingMeemie]

32. Or too many inquiries into credit rating.

Banks will also shy away from this whether or not credit was given based on the inquiry or not. Which I think is asinine.

[Ouabache]

34. Inflation and high interest rates are nothing but a tax paid to the banker

Oh well, at least this way maybe they will stay out of the US Treasury ?

[stopbush]

35. When we sold our home in June

both our realtor and the buyer's realtor told us on the sly that they thought the RE market in NJ was going to deflate within 7-8 months.

I look at it this way - if the housing market is soaring and prices are appreciating at a record pace, then the banks are more than happy to shave a few points off their mortage rates, ie: the high home price over 30 years will make them plenty of $.

However, if housing prices drop, then the banks want a larger percentage of that price up front.

The housing market hasn't yet deflated, but the mortage rates have gone up. Hmmm? Could it be that the banks know what is coming and are making their move now?

Yeah, I think there's BIG trouble right up ahead on the the bush economic disaster road.

[nolabels]

37. Full scale depression Nov 2004, WHEW that's something to look forward to!

Sounds like the * economic recovery team is on the ball, Maybe everybody could chip their 2 cents in and buy award for the resident squatter that has a penchant for Fuzzy Math quotes

[jiacinto]

38. Ok

thanks

[killbotfactory]

40. Just as I'm about to buy a house! !@*(#!($&(&(#*!@!!!

(bleepedy bleep bleep).

[jiacinto]

42. I would then buy now

nt

[Warren Stuart]

43. I got lucky, refi at 5.375, down from 6.875

We bought the house 2 years ago for 290K, had to get the house appraised for the refi, the appraisal came in at 415K we were shocked.

Couldn't believe the housing prices went up so much. I wonder how much it will go down.