A lesson in the unintended consequences of government actions. One thing that would begin to get the economy moving again, increase consumer spending, ease up on the number of mortgage defaults, and raise home prices, is a general drop in mortgage interest rates which usually accompanies an economic slowdown. It appears that the short-term effect of the bailout has been the opposite, directing capital out of the mortgage market and into the hands of the Wall Street giants that squandered trillions.
To: CaptainMorgantown
This rise is much more a function of the temporary but severe confidence situation in bank lending of any type. The indicator to watch here is LIBOR, which, although improving sharply the past two days, is still very, very high on an historical basis.
Get LIBOR down 80-100 bps from here, and you will see the mortgage rate offers drop as if by magic. Patience, m'friend, patience.
One other thing of which you might not be aware. Any number of mortgage products have rates directly tied to LIBOR...which fact, needless to say, has not worked to borrowers' advantage in recent weeks.
2 posted on
10/18/2008 11:38:56 AM PDT by
SAJ
To: CaptainMorgantown
6.74 percentSky rocketing, ROFLOL, money has to be worth something, are inflation will eat your lunch, a rate of 7 to 7.5 is a good mortgage rate. And was judged so for years. This free lunch interest rate needs to be put out to pasture.
3 posted on
10/18/2008 11:43:20 AM PDT by
org.whodat
( "the Whipped Dog Party" , what was formally the republicans.)
To: CaptainMorgantown
This isn’t bailout related. For some odd reason the Treasury added extra 10 year bonds to their last auction at the last minute. It was unexpected extra supply and the yields went up. Fixed rate mortgages are tied to the 10 year bond. Some speculate that the Treasury wanted to make bonds less attractive as a safe haven so more money would go elsewhere. In any case it looks like a stupid move.
4 posted on
10/18/2008 11:51:31 AM PDT by
Moonman62
(The issue of whether cheap labor makes America great should have been settled by the Civil War.)
To: CaptainMorgantown
I paid 7 5/8 interest on my house in the late 90's and thought that the interest rate was pretty good.
People have short memories. Look up the Jimmy Carter years if you want to see high interest rates.
5 posted on
10/18/2008 11:54:35 AM PDT by
politicket
(Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
To: CaptainMorgantown
Good Lord...people have dog memories, don’t they? panic at 7% </snort...magritte
9 posted on
10/18/2008 12:22:10 PM PDT by
magritte
(If a problem comes along, you must whip it.)
To: CaptainMorgantown
**** The benchmark 30-year fixed-rate mortgage rose 54 basis points to 6.74 percent****
Is this some kind of joke? I was paying 7.9% on a VA loan back in 1977.
A couple of years later the lenders were begging me to refinance at a “low” 12% in the last CARTER years.
10 posted on
10/18/2008 12:43:13 PM PDT by
Ruy Dias de Bivar
(We're not supporting clean coal --- Joe Biden)
To: CaptainMorgantown
One way to deal with the rising mortgage rates is to make home loans "assumable" again.
sw
20 posted on
10/18/2008 4:50:47 PM PDT by
spectre
(Spectre's wife (Pray for our Nation)
To: CaptainMorgantown
We bought our farm in 1993 at 7%. I’ve never bothered to adjust it as rates fell...the lowest by us was 5 3/4% a number of years back.
We’ve just always paid extra on the principle each month ($25-$100 each month, depending, with no pre-payment penalties) and that’s done more for us than a lower rate or a scary ARM loan could have done.
Pardon my French, but 7% ain’t sh!t and is nothing to “panic” over, LOL!
22 posted on
10/18/2008 4:55:34 PM PDT by
Diana in Wisconsin
(Save The Earth. It's The Only Planet With Chocolate.)
To: CaptainMorgantown
You got to be kidding.... my first house had a rate that was bought DOWN to 12%. 7% is nirvana.
To: CaptainMorgantown
Dave Ramsey is right on this. The best mortgage out there is the 100% downpayment plan. I wish I’d signed onto it.
27 posted on
10/18/2008 5:30:35 PM PDT by
RKBA Democrat
(Lord Jesus Christ, Son of God, have mercy on me, a sinner!)
To: CaptainMorgantown
My wife and I bought our first house on the backside of Carter’s Misery Mess and thought we really lucked out when rates were at 16%, then dropped to 12% (where we locked in a 30yr fixed) and then watched them rise again to 14%.
Now we have a bigger better house with a 5.75 fixed. Which right now feels great.
29 posted on
10/18/2008 5:59:50 PM PDT by
cookcounty
(The LameStream Press: More investigations into Wurzelberger in 24 hours than Obama in 24 months.)
To: CaptainMorgantown
Cameron Findlay, chief economist for LendingTree.com, says the roots (sorry) of the increase in mortgage rates lie in technical matters. The money in a mortgage-backed security goes in three directions: the investor, Fannie Mae or Freddie Mac, and the servicer who handles billing and collections. Lately, as prices for mortgage-backed securities have plummeted, investors and servicers have been squeezed -- so they demand higher coupon yields and therefore higher mortgage rates. This quote is in direct opposition to the fact that the bailout caused the high rates.
39 posted on
10/19/2008 5:45:56 AM PDT by
mlocher
(USA is a sovereign nation)
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