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re: Mortgage rates sink to lowest level on record
Posted on 8/25/10 at 11:34 am to Tiger JJ
Posted on 8/25/10 at 11:34 am to Tiger JJ
I was thinking about refinacing my new loan but I'm not sure if I would come out ahead being I would have to pay closing cost again. I just got this loan in June '10 for 5.25%, I think the ole boy stuck it to me. I should've bailed out on him but everything had gotten pushed back twice already.
1
Posted on 8/25/10 at 5:03 pm to Tiger JJ
quote:
I don't think so.
So what government action directly supports keeping auto loans low?
Posted on 8/25/10 at 5:17 pm to David Wooderson
Because the Euro story and the slowdown gained traction at approximately the same time that they stopped the MBS program. They've started rolling the MBS into Treasuries fwiw.
Posted on 8/25/10 at 5:19 pm to C
I mean they definitely indirectly support them in the sense that rates are at 0. Certainly you can make a case for direct support for GMAC and GMC. Other than that, IDK.
Posted on 8/25/10 at 5:49 pm to kfizzle85
So if autoloans that are not backed by the govt can be less than 3%, why does anyone think that home loans, which are backed by assets that don't generally lose value over time, would rise considerably if Fannie and Freddie weren't involved?
Posted on 8/25/10 at 6:22 pm to Tiger JJ
quote:Do you mean "UPennFed"?
PenFed
Posted on 8/26/10 at 8:44 am to ea_spartan
don't know if you could refi anyway. I think they changed the guidelines to stop "churning".
Posted on 8/26/10 at 2:33 pm to C
quote:
So what government action directly supports keeping auto loans low?
I suppose you could argue that the intentional steepness of the yield curve is the explanation. The government explicitly wants banks to earn their way out of the mess. If their cost of funds is less than 100bps, then they can comfortably lend on known assets like cars for 300bps.
Posted on 8/26/10 at 2:36 pm to C
quote:
So if autoloans that are not backed by the govt can be less than 3%, why does anyone think that home loans, which are backed by assets that don't generally lose value over time, would rise considerably if Fannie and Freddie weren't involved?
quote:
So if autoloans that are not backed by the govt can be less than 3%
They are not backed, but they are benefiting.
quote:
why does anyone think that home loans, which are backed by assets that don't generally lose value over time
a)that's a big assumption
b)why do you think virtually 100% of originations are being sold into Fannie/Freddie/FHA? It's because the price is artificially cheap and no rational bank would want that credit risk on their books
Posted on 8/26/10 at 4:26 pm to Tiger JJ
quote:
It's because the price is artificially cheap and no rational bank would want that credit risk on their books
Obviously it's better to take the zero risk approach and no one faults the banks for doing this, but what is the cost? .5%? 2%? I don't know. So I go back to why can nonbacked autoloans be less than 3% and wonder why we can't get back to home loans not being backed and what would be the increase? I don't think it's that much.
quote:
They are not backed, but they are benefiting.
Yeah we all benefit greatly from being in the US but I wouldn't call that welfare.
Posted on 8/26/10 at 5:11 pm to C
An average car is, let's say 40k. They are liquid, easily movable and transferable assets. The max loan life is 7 years, and average maturity is probably like 4. All those things affect car loan rates. Take those same factors and adjust them for a house. Average price? 4 or 5x that, I would say (depends on the area obviously, just generalizing here). Liquid, easily transferable asset? They're basically the definition of illiquid assets, so frick and no. Max loan? 30 yrs. Avg maturity? I think its around 7. They have two entirely different risk matrices, I don't think you can extrapolate one to the other to any degree.
Posted on 8/26/10 at 6:19 pm to C
quote:
Yeah we all benefit greatly from being in the US but I wouldn't call that welfare.
I'm talking about the massive market intervention that refuses to let real supply and demand clear markets. That is a welfare state. And we have one. There's no getting around it.
Posted on 8/26/10 at 7:46 pm to Tiger JJ
quote:
why does anyone think that home loans, which are backed by assets that don't generally lose value over time
a)that's a big assumption
That's a correct assumption except for the bubble of the last few years. But that hardley plays are role in interest rates because rates have gone down during the bubble rather than increase with the risk of the bubble.
Posted on 8/26/10 at 8:33 pm to Tiger JJ
quote:Not just the credit risk, but the liquidity and interest rate risks, too.
b)why do you think virtually 100% of originations are being sold into Fannie/Freddie/FHA? It's because the price is artificially cheap and no rational bank would want that credit risk on their books
This post was edited on 8/26/10 at 8:34 pm
Posted on 8/26/10 at 8:41 pm to LSURussian
Jumbo loans for 30yr are about .8% higher. Obviously this take into account things outside of just not being sold to fannie and freddie. So what would the market be for lower valued mortgages? .2%? .3%?
Posted on 8/27/10 at 12:12 am to C
quote:
Jumbo loans for 30yr are about .8% higher.
And require significant down payments - often a good deal higher than 20% and with really hardcore underwriting.
Posted on 8/27/10 at 12:15 am to C
quote:
But that hardley plays are role in interest rates because rates have gone down during the bubble rather than increase with the risk of the bubble.
What?
Posted on 8/27/10 at 12:31 am to Tiger JJ
Correct!! Jumbo loans at the bank are at 5.9% b/c we hold them. Jumbo loans at Freddie are at probably 4.75% to 5.0% b/c we don't hold them and don't want them. I remember the first time I ever closed a 1million dollar loan the national President for Wells told me that loan was not worth a shite to him b/c he would never be able to sell it. At the time I thought he was a dick but now I definitely understand.
Posted on 8/27/10 at 4:43 am to David Wooderson
quote:
Jumbo loans at Freddie are at probably 4.75% to 5.0%
I thought freddie and fannie couldn't do jumbo loans?
Posted on 8/27/10 at 4:47 am to Tiger JJ
quote:
And require significant down payments - often a good deal higher than 20% and with really hardcore underwriting.
Yeah I understand that they are different and carry different risks, but at moment they show a .8% difference vs conventional loans that are protected by the government. So what would the difference be if the loan amount was only $170,000 vs $1.5 Million?
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