Rising Mortgage Rates - OUCH (5%, housing, prices, value)

[Flat2MT]

Will this 75 bps spike since last week put the kabash on this supposed housing recovery?

Hard to argue against this given that refis currently in the pipeline are now dead on arrival, and those new home buyers who qualified in the 4.5% range may not qualify in the 5.5% range....

Not to mention the blowback on the Jumbo loan sector which needed all the help it could get....

[LCMT]

Housing prices will just have to come down even more...no one will be able to afford it much less be able to get a loan!

[chet everett]

The rates that lenders set are driven by yields that investors demand given the risk involved. There is an undeniable relationship that lower prices will tend to reduce some of the risk, and the converse is undeniably true: higher prices will tend to make the ENTIRE CATEGORY of residential mortages more risky.

My gut tells me that lenders are TEMPORARILY swamped and may be OK with rates ticking up a BIT, but if there is BIG fall off in originations OR REFIs the lenders are NOT stupid and will do everything they can to keep their people / systems productive...

[Flat2MT]

Anothe example of the law of unintended consequences.....

Sometimes it's best to just let market forces adjust w/o government 'help.'


ALL BUSINESS: Bond-market rout lifts mortgage cost - Yahoo! Finance

[amerifree]

That whistling sound you hear is home values falling out of the sky this summer.

[eskercurve]

It Is Failing: ALL OF IT - The Market Ticker

Yeah, and things have gotten worse since he wrote that article.

If you take a look at the U6 rate of unemployment, which I like to look at in terms of unemployment and underemployment, it says nearly 16% of all Americans are now in that category.

Table A-12. Alternative measures of labor underutilization
Here's another one that I found interesting: The track record - Paul Krugman Blog - NYTimes.com


So ... all things considered, what do you get when people spend like crazy even in a recession, then remove 16% of all potential spenders? OUCH. And things are getting worse.

I totally agree that home prices have a long way to go before bottoming, and they won't bottom until jobs are created, and jobs that can afford the homes.

Take for instance my hometown of Seattle. It's laughable that an engineer making 75k a year can't afford a starter home (as of late 2007). Things are getting a little more reasonable, but I dunno, I just cannot fathom paying a home 6-7x my annual base income. Historically in my area it's more like 5x.

[J Arp]

Yeah if the rate goes up much more I'm going to pretty much quit looking at purchasing a home unless the prices start to come down. The housing problem hasn't really affected my area so people are keeping their prices as high as possible. It is rather frustrating. I am not going to spend more than 1/4 of my monthly income on rent/mortgage. I'd like to know where these amazing jobs are in my town that so many people can afford 250-500k houses.

[London Girl]

Originally Posted by amerifree

That whistling sound you hear is home values falling out of the sky this summer.

Yes.

"For those about to buy - we salute you"

[London Girl]

Originally Posted by eskercurve

It Is Failing: ALL OF IT - The Market Ticker

Yeah, and things have gotten worse since he wrote that article.

If you take a look at the U6 rate of unemployment, which I like to look at in terms of unemployment and underemployment, it says nearly 16% of all Americans are now in that category.

Table A-12. Alternative measures of labor underutilization
Here's another one that I found interesting: The track record - Paul Krugman Blog - NYTimes.com


So ... all things considered, what do you get when people spend like crazy even in a recession, then remove 16% of all potential spenders? OUCH. And things are getting worse.

I totally agree that home prices have a long way to go before bottoming, and they won't bottom until jobs are created, and jobs that can afford the homes.

Take for instance my hometown of Seattle. It's laughable that an engineer making 75k a year can't afford a starter home (as of late 2007). Things are getting a little more reasonable, but I dunno, I just cannot fathom paying a home 6-7x my annual base income. Historically in my area it's more like 5x.

Shadowstats puts the unemployment rate at around 20%.

Inflation, Money Supply, GDP, Unemployment and the Dollar - Alternate Data Series

[tryin2buy]

As many of you know, I am ACTIVELY searching for a home and the rate increase has now made me seriously re-evaluate my top price range. Homes don't seem to be dropping in price.....we have more overpriced homes than ever (many underwater I suspect.) I guess that when when the plants, dealerships, suppliers, marketing companies, diners that were supported by the plants all start to shut down something will have to give. Rates go down and prices go down or nothing will move.

Every day I question whether or not to hold onto my cash and continue to rent. But I really want a house....but....I really like my cash

My teenager can't even find a summer job at the local Dairy Queen, grocery stores, summer camps....no where! All scooped up by adults and don't get me wrong, they need it more than he does.

I thought all this Obama stuff was supposed to keep these rates in check and the credit "flowing" again. Looks like I missed the boat again and the 5% is gone for a while anyway. Same old story for me.