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Message
re: 30 year fixed interest rate avg rising fast
Posted on 6/15/22 at 5:56 pm to sawtooth
Posted on 6/15/22 at 5:56 pm to sawtooth
quote:
So why are people getting ARM loans? Because they can’t afford the conventional rate so they use that option.
Because they think long term rates will go down during the term of the ARM and they can lock in a lower rate at that time. If think we are anywhere near 2008 then I don’t know what to tell you, but I think you are wrong. Banks have been stress tested, mortgage backed securities are not out of control, people have to prove adequate income to qualify for loans, homes are adequately appraised and we under built homes for the last 14 years. It’s just not the same in my opinion.
1
Posted on 6/15/22 at 6:12 pm to MrLSU
The Fed wants to hammer the real estate asset inflation as their target ... which means a lot of people are going to stay put with their 2 and 3 % mortgages and inventory will stay low for awhile
Posted on 6/15/22 at 6:14 pm to go ta hell ole miss
quote:
people have to prove adequate income to qualify for loans, homes are adequately appraised and we under built homes for the last 14 years. It’s just not the same in my opinion.
All of this is predicated on there not being massive layoffs from companies if we head into a recession. Yeah, there are a ton of job openings, but they are mostly low skill/low wage jobs. People aren't going to be able to afford that 500k dollar house they just bought when they get laid off and the only job openings available are at Wendys working the drive thru line.
And the layoffs have already started. ETA: I don't think we are heading for 2008 scenario, but there is a ton of evidence that people are going to be underwater very soon. The consumer balance sheets they love to say are great, but rising inflation and $5 gas is about to evaporate that.
This post was edited on 6/15/22 at 6:17 pm
Posted on 6/15/22 at 6:15 pm to wutangfinancial
quote:
I'm in the market for a house in DFW and NW Arkansas. I'm really tempted to go with an ARM
I think the obvious question would be if you’re looking at ARMs because the initial rate allows you to more easily qualify or ease the payment burden, or because you don’t plan on being in the house long after it might adjust anyway?
Course, it could also be that you believe rates will stabilize (or even fall) prior to an adjustment?
Posted on 6/15/22 at 6:18 pm to Triple Bogey
quote:
the only job openings available are at Wendys working the drive thru line.
I sure as heck wish they could find somebody to work the drive thru line at Wendy’s (though I prefer Arby’s
).
Posted on 6/15/22 at 9:23 pm to Jag_Warrior
Just built a house, an 850k "forever home" that we finished in August 2021. Lender talked me into a 15/15 ARM, locked in at 2.8% for 15 years. Rolled a pool and outdoor kitchen and the whole nine yards in at that rate too. Who the hell knows where rates will be in 15 years, but my God I'm feeling good about that 2.8% for the next 14 years when I go to bed at night.
Posted on 6/15/22 at 9:46 pm to Saint5446
Nice! We are at 2.8% for our forever home that we bought in October 2020. This thing is a beast to maintain but happy that the note is low.
Posted on 6/15/22 at 11:59 pm to wutangfinancial
I think your right, no one is buying MBS right now plus you have the fed unwinding it’s balance sheet
Posted on 6/16/22 at 9:12 am to mortgagemanlc
I was talking with my CAO yesterday and we were theorizing maybe the prepayment risk is too high with the higher coupons when you look at long rates and futures/forwards. To be honest I wish I knew more about the end users of MBS. I know that it's a balance sheet tool and is used in REPO. With not bid on off the run MBS maybe counter parties think it's trash collateral.
This post was edited on 6/16/22 at 9:16 am
Posted on 6/16/22 at 9:13 am to MSTiger33
quote:
We are at 2.8% for our forever home that we bought in October 2020.
Such a good decision. I wish I would have bought a house in the States during all this.
Posted on 6/16/22 at 9:41 am to I Love Bama
Every bank and non-bank lender in the country are busy rebuilding out their HELOC programs back up. I would start shopping HELOCs over Arms tbh.
Posted on 6/16/22 at 1:11 pm to Triple Bogey
quote:
but there is a ton of evidence that people are going to be underwater very soon.
How so?
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