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A fading middle-class perk: lower mortgage rates
Associated Press ^ | Apr 25, 2014 12:06 PM EDT | Josh Boak

Posted on 04/25/2014 9:25:04 AM PDT by Olog-hai

For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates.

Now, even that perk is fading away.

Most ordinary homebuyers are paying the same or higher rates than the fortunate few who can afford much more.

Rates for a conventional 30-year fixed mortgage are averaging 4.48 percent, according to Bankrate. For “jumbo” mortgages—those above $417,000 in much of the country—the average is 4.47 percent. …

(Excerpt) Read more at hosted.ap.org ...


TOPICS: Business/Economy; Government; News/Current Events; US: District of Columbia
KEYWORDS: federalreserve; inflation; interestrates; mortgagerates; obama; yellen

1 posted on 04/25/2014 9:25:04 AM PDT by Olog-hai
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To: Olog-hai

Now I get it. Your level of wealth is determined by how much you spend on a house!


2 posted on 04/25/2014 9:29:06 AM PDT by andyk (I have sworn...eternal hostility against every form of tyranny over the mind of man.)
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To: Olog-hai

Wholesale always costs less than retail.

I wonder how much effort the MSM will put into trying to get the LIV population riled up over a difference of 0.01% (one part in ten thousand).

On a loan amount of $165K, 30 years, the difference between a rate of 5.00% and 5.01% is $1.01 per month.

Meantime, the tax rate on a $200K house (for which one would have to borrow the $165K after a 15% down payment) would be about $800 per month.

So an LIV is supposed to get irate about $1 per month he gets “stung” for against a “rich guy,” but about the $800 per month his local politicians take to buy votes, he’s supposed to say “oh well, that’s life.”


3 posted on 04/25/2014 9:38:14 AM PDT by Steely Tom (How do you feel about robbing Peter's robot?)
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To: Olog-hai

The real rate isn’t changing. Inflation is rising.


4 posted on 04/25/2014 9:38:23 AM PDT by DManA
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To: Steely Tom

Precisely, taxes are driving people out of their homes.


5 posted on 04/25/2014 9:39:06 AM PDT by DManA
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To: Olog-hai
So the normal mortgage market is now controlled by the government while the jumbo market is a relatively free market. And while the government through Fannie Mae and Freddie Mac are piling up the pain on the common home buyer, those who can avoid them do better. I wonder if things get worse, will banks give buyers with great credit loans which don't go through the government? And will this cause a cascade of failure as that will drive up costs on the rest of the borrowers with low credit scores, the best of whom will then get independent loans which further drives up the cost on the rest driving out the best of the remaining borrowers...
6 posted on 04/25/2014 9:43:16 AM PDT by KarlInOhio (Republican amnesty supporters don't care whether their own homes are called mansions or haciendas.)
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To: DManA

Yellen’s Fed at work already, then? Wonder how they can spin this to blame “the GOP” or “the conservatives” who have nothing to do with it . . .


7 posted on 04/25/2014 9:43:36 AM PDT by Olog-hai
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To: Olog-hai
Most ordinary homebuyers are paying the same or higher rates than the fortunate few who can afford much more. Rates for a conventional 30-year fixed mortgage are averaging 4.48 percent, according to Bankrate. For “jumbo” mortgages—those above $417,000 in much of the country—the average is 4.47 percent.

People are complaining about one-hundredth of one percent? Get back to me when we hit those high-teens double-digit interest rates that highlighted the Carter administration.

8 posted on 04/25/2014 9:45:12 AM PDT by Alex Murphy ("the defacto Leader of the FR Calvinist Protestant Brigades")
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To: Alex Murphy

>>People are complaining about one-hundredth of one percent? Get back to me when we hit those high-teens double-digit interest rates that highlighted the Carter administration.<<

I was thinking the same. Up until about 10 years ago, you were lucky to get a rate below 8%! And, I remember a friend of mine bought his house with a 14% loan in the late 70s.

This is a bunch “the sky is falling” nonsense about nothing.


9 posted on 04/25/2014 10:00:57 AM PDT by freedumb2003 (Fight Tapinophobia in all its forms! Do not submit to arduus privilege.)
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To: DManA

There’s something to be said about having a couple hundred thousand in a 3-4% mortgage when the inflation rate is 4-5%.


10 posted on 04/25/2014 10:02:39 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: MrB

You think the banks would start screaming to Congress if they had a huge portfolio of 3% mortgages and inflation went up to 15%? Contracts are not sacrosanct anymore.


11 posted on 04/25/2014 10:06:25 AM PDT by DManA
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To: DManA

I can see a letter in the mail...

“Due to rising inflation, your rate will now be adjusted to the inflation rate + your previous mortgage rate.”


12 posted on 04/25/2014 10:10:08 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: MrB

Yup. That scenario is entirely plausible.

Because it wouldn’t be fair for a “small” number of people to benefit when everyone else is suffering. It would require and act of Congress - the Mortgage Fairness Act of 2017.


13 posted on 04/25/2014 10:15:59 AM PDT by DManA
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To: freedumb2003

Our first home in 1987 we paid 10%. Now we are paying somewhere around 3.5% on a 10 year note. That’s less than what my parents paid in 1962. But every hike will drive buyers out of the market and lower demand.


14 posted on 04/25/2014 10:25:00 AM PDT by henkster
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To: Steely Tom

“Meantime, the tax rate on a $200K house (for which one would have to borrow the $165K after a 15% down payment) would be about $800 per month.”

WOW, those are some beefy tax rates!


15 posted on 04/25/2014 10:28:30 AM PDT by Beagle8U (Unions are an Affirmative Action program for Slackers! .)
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To: DManA

That’s very true...........but I can’t figure what it means. What happens when someone or a group is forced to sell due to overly high property taxes? Are they forced to sell at a loss? Does it mean that home values in the area begin to decline due to distress sales?

What happens?


16 posted on 04/25/2014 10:42:30 AM PDT by Rich21IE
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To: Olog-hai

If you are middle-class, there is a 50-50 chance your mortgage will be a jumbo loan. So once again the AP misses the point.


17 posted on 04/25/2014 11:19:51 AM PDT by SampleMan (Feral Humans are the refuse of socialism.)
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To: Olog-hai

In today’s world all they have to do is make the accusation and that’s enough for most idiots in this country. They will accept it as gospel.


18 posted on 04/25/2014 12:13:52 PM PDT by prof.h.mandingo (Buck v. Bell (1927) An idea whose time has come (for extreme liberalism))
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To: Olog-hai

To some, appearances are everything, and debt, nothing. To others, lower taxes and other costs are very important. Want to look rich? Get a big loan. Want to get rich? Learn to build a tiny, efficient house where property taxes are very low and lots, cheap. Then do it, no matter how long it takes.


19 posted on 04/25/2014 12:20:56 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: DManA

Smaller classes in St. Paul schools mean less room for diversity

http://www.startribune.com/local/stpaul/256636541.html

now they’ll need a new reason to jack up property taxes


20 posted on 04/25/2014 1:29:31 PM PDT by TurboZamboni (Those who make peaceful revolution impossible will make violent revolution inevitable.-JFK)
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To: Beagle8U
WOW, those are some beefy tax rates!

Upstate New York, I should have stated.

More than $10K/yr on a $250K house.

Perhaps my math was a little off. More like $675/mo on a $200K house.

21 posted on 04/25/2014 2:38:48 PM PDT by Steely Tom (How do you feel about robbing Peter's robot?)
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To: Alex Murphy

Our first house was financed at 14%. Was in it 4 years and sold it and bought another. We got a special loan and financed it at 7.5 and were blissful about it.


22 posted on 04/26/2014 8:41:02 AM PDT by sheana
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