Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Just shows how uneducated Realtors are. How many times over the past two years have you heard them say, "Nows the time to buy, interest rates are heading up next month, the bottom is here, etc, etc....?
"Two years"...is what the govt. is now saying interest rates will stay low. How low? Who would imagine 2 1/2% interest?
Housing will continue to slide for the same time period because the govt. will fail miserably in their attempt to keep prices artificially inflated?
Owning a house is like holding a hot potatoe, but it will take a revamp of the Realtors unjustified 6% comission before anything happens. They will start to eat each other in the near future by rapidly slashing their fees in an effort to feed their families. To bad they're not unionized.
Even if a 30 year fixed cracks under 4%, the impact of the low rates is becoming immaterial. Most who are able to have refinanced out of Alt-A or prime into lower rate 30 year notes. Those who would like to are too far underwater to benefit even if rates fall further.
And a historically low mortgage rate doesn't mean it is available to everyone.
Just shows how uneducated Realtors are. How many times over the past two years have you heard them say, "Nows the time to buy, interest rates are heading up next month, the bottom is here, etc, etc....?
"Two years"...is what the govt. is now saying interest rates will stay low. How low? Who would imagine 2 1/2% interest?
Housing will continue to slide for the same time period because the govt. will fail miserably in their attempt to keep prices artificially inflated?
Owning a house is like holding a hot potatoe, but it will take a revamp of the Realtors unjustified 6% comission before anything happens. They will start to eat each other in the near future by rapidly slashing their fees in an effort to feed their families. To bad they're not unionized.
dont mis-understand, ,, The fed is talking short term rates when they said rates will be low , the fed funds rate and discount rate,,,, not long term rates which they cant control very well..... long term rates have already jumped a point since last year.. they were 4 and now are around 5% . ,those are the rates the mortgage back securities typically track even though they are not directly linked...
the fed is fighting hard to artficially manipulate the mortgage backed securities so they dont follow the lead of the long bond rates which are up . the fed is fighting investors around the globe who are trying to bid them higher so they can be compensated for taking the risk.
to bring them back down the fed had to buy over 1 trillion dollars in mortgage back securities at the recent auction to keep investors from running them back up..
how much longer the fed can or will do this is unknown..... one thing is sure, the day they stop a 1% jump almost over night is not beyond reality,..
lucky for the fed there isnt to much participation on behalf of investors in mortgage back securities lately so they have been able to dump in a trillion bucks and influence things . if that market gets more participants again it would be like the fed trying to control the long bond treasury market which is like trying to bail out the titanic with an eye dropper
Last edited by mathjak107; 11-19-2009 at 01:25 PM..
I had posted this in another thread here but for those who dont have a clear understanding of our rate system hopefully its helpful
there are 2 sets of rates, short term and long term
both sets of rates are controlled by investors all over the world. they do this by bidding for our bonds every moment of every day the markets are open.
the fed signals to investors that they are happy or not happy with where rates are bid by whats called the discount rate and the feds fund rate.
the fed funds rate is the rate banks can borrow from each other , the discount rate is the rate banks can borrow from the fed. since borrowing from the fed is a sign of having to run back to papa for money most banks prefer to get their money from each other or investors. going to the fed window is looked at as a sign of weakness or failure.
short term rates are linked to credit cards, the prime rate, buisness loans etc and is the feds main arsenal for controlling inflation.
the fed is usually good in getting investors to follow there lead here and short term rates usually track the feds set rates.
afterall a bank isnt going to borrow money from you or investors at much more then they can go to each other or to papa for.
the fed has great control over short term rates as when the fed announces a cut every bank is expected to cut their short term loan rates.
the fed has little control over long rates, the ones that determine mortgage rates. they can try buying or selling long term bonds to influence things but usually they cant control things enough to win out over what the world wants., the worlds investors win almost every time. as much as they wish they can control things here the fed can not.
long term rates are mostly set by investors round the world. its based more on perception of the future then whats happening now. these rates are more a reaction to other events in the world then diectly linked to the feds short term intentions.
many times investors said to hell with what the fed wants , we know better and while the fed is trying to raise rates investors dont see the future that way. just recently before the collapse the fed was trying to get all credit markets to raise rates. in defiance the long end marched to its own drummer and bid rates down. thats in contrast to whats normal.
you normally get more for loaning money longer, but now short term rates controlled and influenced by the fed were higher then long term rates which were controlled by the worlds investors.
papa fed was most unhappy with this but there wasnt a hell of a lot they could do as investors just werent taking there cues from papa fed ..
now we have the reverse, the fed is signalling by keeping short term rates rates low that they want the long end to do the same.
once again investors have there own view of the future and are bidding rates higher.no one sees loaning money for 30 years at these low short term rates as anything they want to do or take the risk with for 30 years so they are demanding more interest to be compensated . as inflation worrys off in the future get stronger these rates are bid higher and higher.
right now investors are offering a full 30% less for a 30 year treasury then they did last december. that works out to almost demanding a full point more interest .
while investors accepted 4% last year now they want 5%
its these long term rates that spill over to the mortgage back securities that determine mortgage rates since they operate off the long end not the short term rates.
the fed is artificilly trying to manipulate those mbs securities right now to keep them from tracking the long end of the bond market.
the mbs market is many times smaller then the treasury bond markets world wide so its been a little easier for them to influnce them and try to hold them down.
as small as that mortgage back securities market is right now because of lack of interest by investors it still took the fed a trillion dollars today to artificially drive rates down while investors wanted them up.
Just a guess..you are retired and can afford to look at the world through rose colored glasses.... right?
well, almost.
I am retired.
I can't afford much.
I don't look back - something might be gaining on me (Satchel Paige)
I have a pair of rose colored glasses that are good for lots of things.
I first worked and paid taxes in 1964. I married 10 years later and had 2 sons. We always lived a very modest lifestyle. As incomes increased and expenses decreased, we saved for retirement. We never, ever acquired credit card debt. The only debt we had was college, car, and home loans. For the past 12 years, the only debt has been mortgage. If we can't pay for it up front, we don't need it.
We retired into the same modest lifestyle in which we have lived our entire life together. Our retirement income, adjusted for inflation, will keep us at or slightly above that income as long as we both shall live.
We designed and had our custom home built. We researched where we want to live - and continue to research. Will will buy with intent to remain.
We lived through price controls (Nixon), stagflation (Carter), deficits (Reagan), Y2K (Clinton), and so on. Life is still good.
We are the ANTS. Only grasshoppers truly suffer when the weather gets bad. Our house is built on rock; winds and rains won't wash it away. Our faith puts on the glasses and everything looks rosy enough.
Me too, i have lived thru wars, hyper-inflation, more then 1 stock market crash, 2 real estate crashes, and all the sky is falling scenerios i care to count.
my investments all did well over time, and we are retiring too next year.....
life goes on
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
well, almost.
