CNN "Money Team" : Mortgage rates could fall BELOW 4%

[SoCalDem]

BUT..for NEW mortgages only..and guess who will qualify for those "new" mortgages? Rich people who have some cash..

They are the ones who are patiently standing by, as more and more foreclosures happen, and when "planets align, just so", and prices are just right..they will pounce on those cheap mortgages.. They are afraid to risk "the market", and T-Bills are in the neagtive..gold is sky-high.. meaning that real estate is the logical place to invest..and at fire-sale rates..

People like us, who have been in the same house for a long time will NOT see our mortgage rate lowered to the <4%, nor would we probably qualify, due to age and approaching retirement...and the younger folks just entering the housing market probably will not have the credit rating to get it either..

This is another perk-in-waiting for the moneyed classes and for the builders who have a shit-load of new homes and nearly-new homes that are vacant and/or unsold..and the start of the "next" property boom..:grr:

[theoldman]

1. It will be a repeat of the housing bubble from the last few years.

Low interest rates were a big part of the problem.

[BeatleBoot]

2. Those with cash always do better when times are bad.

I know that the notion is obvious, but true nonetheless.

[AnneD]

3. It can drop to zero....

if you don't have a job to pay the loan back-it means exactly dick.

[gristy]

4. I don't see the residential housing market as attracting "investors", rich or otherwise,

for a generation. But in 20 years, maybe 15, watch out. It'll happen all over again.

[SoCalDem]

5. Foreclosed homes, bought on the cheap make pretty good investments

people have to live somewhere, and many people are rich NOW, because they bought places & rented them out in the LAST boom..

A friend of mine's sister flew here from GUAM.. why? to BUY 3 houses in Riverside county. She plans to let her daughter live in one (she's a student at UCR) and to rent the other two out.

[gristy]

7. OK. I guess this would be a good thing, too. Helps put a floor on the market.

But owning and renting out individual houses, as opposed to apartments, is a lot of work and expense. It's not for everyone, and so the floor I mentioned may not be too solid.

[KoKo]

24. With so many losing their jobs it makes the "fear factor" kind of outweigh

average folks who might buy. So who are the developers going to sell those homes they haven't been able to unload to? I wonder if this isn't just another Paulson/Bush mistake. Thinking they can manipulate things and it not working. :shrug: Anyone who could think about buying has seen their 401-K hit the crapper, too.

[GoesTo11]

6. So could I essentially swap houses with my next door neighbor?

And we would each take out the new lower mortgage rates?

This low mortgage rate is a stupid idea. It's like handing out free money. The problem isn't that 5.5% mortgages are too high. The problem is that people are going bankrupt with 13% adjustable rates on houses they couldn't afford in the first place.

How about 6% basic 30 year rates (Refinancing) for people who would default if they were stuck with the ratched up adjustables? This would mean government essentially eats the extra charge for default risk. But as a taxpayer and a homeowner who wouldn't benefit, I'd think this is fair, fairly cheap compared to everything else, and probably good for the country too.

[SoCalDem]

8. except for the fact that even with lowered rates, MANY people could still not "afford"

that house.. People were lured into trying to buy more house than they could afford..

Unfortunately, the whole ponzi scheme has to collapse, before things can normalize, and the big losers will be the people who did not sell out & downsize before 2005:(

[Barack_America]

9. OTOH, it will make it easier for people facing foreclosure to sell their homes.

Thus preventing many homes from reaching foreclosure and preventing the subsequent slide in neighborhood home values.

And I presume that people selling their homes would be eligible for the lowered rates on a purchase of a different home. (if they're not, then this plan is complete BS)

I guess the idea around this is that the credit bubble put too many people in "homes they can't afford". So this seems to be a way of getting people into "homes they can afford" in a manner that would prevent foreclosure and bankruptcy and stabilize home prices.

The quotations are to represent my skepticism regarding the powers-that-be deciding what people can and cannot afford when they themselves have been treating the buying and selling of mortgage assets like a Vegas gambling spree.

[3waygeek]

10. My FHA adjustable just went down 1%...

from 5.625 to 4.625. It would have gone down more, except that the rate change is capped at 1 point per year, max of 5 points over the 30-year loan.

[earthlover]

11. shh....some of us don't want to hear stuff like that!

[MazeRat7]

12. Refinancing is a "new loan", typically with a different lender... why wouldn't any of us qualify ?

I know I will try. I'm locked in around 5.7% on a 30-yr fixed. If there is even a chance I would get another percentage point off it would be worth it since I plan to be here a really long time and I've got about 50% equity (yes it used to be more, but we all know existing home prices are down).

Peace,
MZr7

[all.of.me]

13. I think this is geared towards regular buyers, not investors.

Investors lost a shitload of money when the market crashed. Most of them have disappeared. And for plain folks, they still have to come up with 20% down and jump through lots of hoops. Lower interest rates does not mean the market will be stimulated.

My understanding is also that these rates are for new purchases, not re-fi's.

[MazeRat7]

14. Not for re-fi's eh? ... Rats!!! n/t

[all.of.me]

15. Nope. Sorry. That's what my mortgage broker said. I just re-fi-ed at 5.6%

[MazeRat7]

16. Well I'm at 5.7 so I shouldn't bitch, but I would have liked a much lower rate... n/t

[all.of.me]

17. I came down from 6.3, and I could have gotten lower than 5.6...

... but my credit is not stellar, so that's where I ended up. Saved me plenty, though! She's a genius.

[MazeRat7]

18. Every bit helps...

Actually I did mine in '05 before rates went back up, I came down from the upper 7's. It ended up saving me almost a grand/month. I just wish I could find the capital to pay off the balance. If all I had to worry about were keeping the lights on and food in the pantry, it would make the tenuous nature of my field a little more secure.

Peace to you, and congrats on saving a few extra of your hard earned $$$$

MZr7

[all.of.me]

19. Hey thanks.

If you ever want to find an off-grid home in the mountains of northern NM, pm me. :)

[Writer]

21. I wish I could refinance... I'm at 6.25 and we have excellent credit...

but I bought my house in July with 3% down, and I doubt our current equity would be enough to cover the refinance costs.

[all.of.me]

23. Doesn't hurt to ask! nt

[notesdev]

20. Who will qualify for those mortgages? Not just the rich

Also, people like me, who didn't greedily jump into a (way overpriced) housing market that 'could never go down', being laughed at for renting rather than buying into the Ponzi scheme of mortgage financing and inflated housing costs.

For people like me, who bode their time and humbly rented and saved while the rest of the country was engaged in a spending spree of faux prosperity, the combination of rock-bottom interest rates and plummeting house values is perfect. I'm going to bide my time another year or two while the rest of the air gets let out of the housing/finance bubble and get a deal of a lifetime.

Amazingly I didn't have to be rich to be in this situation, all I had to do was be humble, patient, and live a lifestyle that didn't rely on debt to pay for what I consumed.

[OPERATIONMINDCRIME]

22. Totally Wrong. It Will Totally Stimulate The Home Buying Market For Regular Home Buyers.

It's actually a really good idea and is in no way some perk in waiting like you're classifying it as. You're just knee jerking to it rather than giving it the critical thought it deserves. Plenty of people are still buying houses but many have cold feet right now due to the economic situation. The mortgage rate of 4% will get a ton of them to jump on board with purchasing a new home. It's a great thing for regular middle class americans despite your off the mark assessment of it.