Blues Kitten – made some great observations. Seasonality definitely is pervasive in transaction counts but the warmer climates show less. Speculative new development was the key driver in the warm weather markets.

http://blog.seattlepi.nwsource.com/realestatenews/archives/132383.asp?source=rss

ever vigilant :)

Greed will overcome any amount of eduction. Likewise, fear can cause people to panic beyond what is reasonable too. This is why we will have extremes on the downside too.

“Local lenders and housing counselors applauded the move, and say educating prospective homeowners is key to never getting in this mess again.”

Oh, the irony.

Risk premium is now being factored into all the mortgages being sold, in all flavors. That is why you are starting to see a spread widening between the 10 yr treasury and mortgage rates. Traditionally they move in unison, but right now banks are not willing to buy mortgages in a declining market without a risk premium.

As the market continues to deteriorate and market conditions get worse, the risk premium will get higher and higher. Despite the Fed cutting rates, mortgages are going to continue to rise as long as being mortgages is risky. The lender wants to be compensated for the additional risk he is taking on his books.

That’s all it is. It’s not that people were trying to live beyond their means, or seeing their homes as money generating machines. It’s just that they got a “bad” loan product.

…..Marvelle Lahmeyer, a housing counselor with Kitsap County Consolidated Housing Authority, said she’s never seen it so bad. Dozens visit or call her Silverdale office each week. She expects quadruple that volume this year. The tissue box is hopping…….

However, how that might translate into mortgage rates is a dicier issue. I think it is a fair bet we will continue to see mortgage rates rise for any kind of even slightly risky product (Jumbos, Alt-A, no-doc, small down-payment, etc).

The big unknown is what will happen to the straight-forward 30-year fixed products, with good down-payments, documentation, and credit history. They could stay where they are, rise, or even fall. I suspect we may see quite a bit of volatility in mortgage rates over the next 24 months as the financial markets continue to reach market prices for all the toxic waste in the system. In the LONG run (30 months, say) I believe we will see rates for super-safe 30-year fixed loans lower than they are today. Most of the other mortgage products won’t even exist.

Wrong URL Above, here’s the right one:

http://www.behindthemortgage.com/behind_the_mortgage/interest_rates/index.html

Plugs a finger in each ear.

At the top of my lungs….

“LA LA LA LA LA LA LA I CAN’T HEAR YOU LA LA LA LA LA LA I HAVE NO IDEA WHAT YOU’RE TALKING ABOUT LA LA LA LA LA”

The witches brew logic I hear makes no sense though, like they assert the economic stimulus package will cause inflation, because its not really needed, and the economy is on the rebound this year type hogwash….therefore, interest rates up .5% this week with good economy inflation fears.

see the convoluted proof:

http://maps.yahoo.com/maps_result.php?q1=Steilacoom%2C+WA+98388&rd=1

My guess is the banks aren’t passing the recent fed fund cuts to real estate mortgages [they don't have to], but they made sure to butcher axe money market savings rates anyway. Its welfare bail out money for the rich banks, courtesy of the Feds….

I argued with my broker at the end of the year (’07) about rates dropping (I said, no way) and he ended up being right, but his tune has changed very recently, so now my broker is probably getting glossy eyed. If rates go to 7%, affordability will probably be increasing while housing price pressure mounts–everywhere. But, until then, I’m going to think about happy things.

Now that you have me thinking…I’ve found it interesting to track common adjustable rate mortgage index:: LIBOR, 1 yr Treasury, etc.. because ARM’s are tied to these. For example, it is really helping those with resets keep their rates low. On the other hand, I’m reading reports that defaults are occuring prior to these recasting, not necessarily because housing values are dropping; which means that people got in over their heads to begin with.

Seattle’s line seems to be a hybrid of the two extremes; the seasonality was pretty evident until 2004 and then the winter lows didn’t really materialize anymore until this year.

I think that Steve Tytler, whether intentially or not, has been writing in the Herald about the market changes and that people considering refinancing should move forward with it (at least that is the underlying theme).