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re: Mortgage rates sink to lowest level on record
Posted on 8/27/10 at 9:55 am to C
Posted on 8/27/10 at 9:55 am to C
quote:
I thought freddie and fannie couldn't do jumbo loans?
Presumably he's talking about so-called "conforming jumbo". Where I live, they're up to $567.5K.
quote:
So what would the difference be if the loan amount was only $170,000 vs $1.5 Million?
I think you are right in that 10-year treasury rates being at 2.6% right now are having an overall influence that cannot just be classified as "government influenced". But if Fannie and Freddie were allowed to fail - along with several other government intrusions - the clearing price for privately-retained 30-year mortgages would be a lot higher than 4.5%.
1
Posted on 8/27/10 at 11:43 am to Tiger JJ
Which is why:
is absurd. That's the point of having the Fed control interest rates, so that when they move to ridiculous levels to adjust for economic circumstances, the Fed can keep them in line so borrowing costs don't shut down the economy. What do you think would happen to mortgage rates if the Fed weren't at 0? I can tell you matter of factly the answer is not 4.375%.
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.
is absurd. That's the point of having the Fed control interest rates, so that when they move to ridiculous levels to adjust for economic circumstances, the Fed can keep them in line so borrowing costs don't shut down the economy. What do you think would happen to mortgage rates if the Fed weren't at 0? I can tell you matter of factly the answer is not 4.375%.
Posted on 8/27/10 at 3:37 pm to kfizzle85
quote:
What do you think would happen to mortgage rates if the Fed weren't at 0?
I know that is the main reason that mortgage rates are low, but that effects all types of credit, correct?
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.
I was trying to say that the risk of increasing overpriced assets that back the loans does not currently effect the interest rates. Obviously this is due to the government holding the asset and not the banks that service the loans.
I'm just trying to figure out how much "welfare" we home buyers are receiving. I just don't think it's that much other than the rate being near zero. Especially when you look at jumbos at 5.3%. Obviously those are taking into account the overpriced assets that may be out there and the fact that it's more difficult to sell in the higher priced market with fewer buyers.
Posted on 8/27/10 at 5:04 pm to C
quote:
I'm just trying to figure out how much "welfare" we home buyers are receiving.
If Frannie had never received a single bailout dollar and then proceeded to be used by the Fed for over a trillion dollars worth of stealth quantitative easing, private mortgage rates might well be above 10%.
Posted on 8/28/10 at 12:53 am to Tiger JJ
Crazy thing happened today. Government states they will keep everything propped up and pricing on rates actually got worse by .5%. I really don't understand how all this works but realize the market went up so the 10yr bond went up. Why did this happen when we had bad news from the treasury? I expected with the GDP news coming out today rates would have gotten better not worse.
Posted on 8/28/10 at 10:28 am to David Wooderson
Day to day movements =/= day to day newsflow. In light of the other thread, dare I say...technicals?
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