so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

[Munger]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

Any takers for the notion that the Fed won't hike short term rates as long as job losses continue? It would be a difficult policy to explain to the public at this point, because for years the simplistic narrative transmitted by the MSM has been "low rates = more jobs". If it happens, it would be a good measure of the political independence of the Fed... or possibly the magnitude of their concern.

My thinking is that the Fed is performing a little experiment by letting rates rise a bit to test out the effects on the housing market. It would like for the rates to rise a bit to combat the now common meme of runaway inflation, but can't let housing drop too fast or there will be another financial crisis because of the further collapse in the value of housing collateral.

My guess is that they are going to find out that the speed of housing price drop is more strongly correlated with rates than they want, and will announce further mortgage debt monetization.

[nero3]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

The yield curve is pretty similar to 1992. I think solar stocks have really done well lately, it seems that is the new bubble going forward.

Of course, the yield curve from mid 2003, is perfectly identical. Fits like a glow. The only difference is the lower short term rate now. I think short term rates could be around 2 % to low.

[ax]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

Yes, I pay my debts and I just closed my re-fi. I had let my ARM loan reset and it settled 0.250% above the original loan in March. But I didnt feel safe about rates being low very long so I applied in March and closed last week! It took me a while to find a loan without points and I had to get it from a credit union. Forget banks unless you are ready to pay 0.5 -2.0 points up front. Kinda defeats the purpose of a loan to me, pay the interest up front bleah!!

I also took enough money out to pay off a car loan but now I am thinking I may pay off part of it and hold on to the rest of the cash. I don't have a great cash cushion, so this would help a bit. All said and done, I am good for another 30 years at 4.875%

Now if treasury rates really start going up, I can reinvest the cash from the loan into those as long as they exceed the rate on my car loan.

Thanks, maybe need to check into a credit union. Wasting countless hours on this re-fi.

[loweyecue]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

I trust Banrate as source of up-to date mortgage rates. My own experience during my extensive search revealed their accuracy to be pretty amazing. They are now reporting nationla average has jumped to 5.95 %

http://money.cnn.com/2009/06/11/real...n=money_latest

[ax]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

I trust Banrate as source of up-to date mortgage rates. My own experience during my extensive search revealed their accuracy to be pretty amazing. They are now reporting nationla average has jumped to 5.95 %

http://money.cnn.com/2009/06/11/real...n=money_latest

Fannie said 5.59% today and that's lagging.

[BrianL]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

The lenders I talked with were expressed surprise at how accurate the daily numbers at http://www.zillow.com were.

Their quotes were in line with what among larger lenders while looking to refinance - they are closer to 5.6% at the moment.

[Sharky]

Re: so... when do 30 yr mortgage rates hit 5.5% and then what for housing?

This inflation play idea seems obvious to me but I have not before seen it mentioned on the tulip. There seems to be almost a moralistic hatred of debt on these pages. But surely it is rational to have debt at a fixed interest rate if you are expecting inflation.

Just because we have inflation doesn't mean that we also have wage inflation.

Imagine a scenario where everything you buy on a regular basis is going up in price -- food, fuel, clothing, etc. -- but your wage is staying constant. How does debt help you in that scenario? The debt is actually becoming more expensive for you to pay off as inflation progresses, because you have less and less discretionary income left as time goes on.

After enough of this type of inflation, you don't have enough money left to make the payments, and you are foreclosed on.

In that case, having debt doesn't seem so rational to me...