A fading middle-class perk: lower mortgage rates

Associated Press ^ | Apr 25, 2014 12:06 PM EDT | Josh Boak

[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. …

[andyk]

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

[Steely Tom]

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.”

[DManA]

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

[DManA]

Precisely, taxes are driving people out of their homes.

[KarlInOhio]

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...

[Olog-hai]

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 . . .

[Alex Murphy]

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.

[freedumb2003]

>>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.

[MrB]

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

[DManA]

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.

[MrB]

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.”

[DManA]

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.

[henkster]

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.

[Beagle8U]

“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!

[Rich21IE]

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?

[SampleMan]

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.

[prof.h.mandingo]

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.

[familyop]

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.

[TurboZamboni]

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