Here comes the Alt-A crisis

[HappyTexan]

Originally Posted by middle-aged mom

Regulator: mortgage rates could drop to 4 percent (http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/12/10/financial/f135554S09.DTL&type=realestate - broken link)

That's all well and good, but the borrowers need to qualify and the banks need to have money to loan.

Dropping the rates won't fix much.

[cohdane]

Definitely hair of the dog. What happens when rates return to typical levels?

My own contrarian theory is that they'd do more to spur buyers if they suddenly let mortgage rates go up to where they want to be right now. Part of the last housing boom was motivated by fear of being priced out of the market. The same fear could motivate fence sitters now if mortgage rates started heading north towards 8-10%.

As it is buyers now fear depreciating values. A percent off on a mortgage isn't going to go far enough to cancel out the potential of the home dropping 20-30% of its value in the next few years.

[chet everett]

People are not concerned about further drops in the value, if they were they sell and rent.

People are concerned about affording what they have. They are concerned that job loss is right around the corner. They are concerned that if they try to refi the house will not appraise out. They do not care what happens in few years, they are concerned with the next weeks / months.

[SittingOnSomeBubble$]

''They are concerned that if they try to refi the house will not appraise out.'''

uhhhhhhhh... that is the same as 'being concerned about further drops in the value'.