Still Waiting for the Promised Surge in Interest Rates

I thought it might be worthwhile to take another updated look at mortgage rates. Here’s a chart of mortgage rates via the Federal Reserve over the last seven years.

Weekly Conventional Mortgage Rates

Latest rates came in at 3.88%, the lowest they have been as far back as the Federal Reserve’s data goes (early 1971). Here’s a chart of the entire data set:

Weekly Conventional Mortgage Rates

I can’t wait until rates finally rise back to six percent or so—about where they were through the duration of the real estate bubble. I have a feeling that agents and news headlines won’t be touting six percent rates as “historically low rates” like they were in 2005 and 2006, despite that they will still be historically low, as you can see above.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

59 comments:

  1. 1
    Scotsman says:

    And with Ben B. announcing yesterday that the Fed wil be keeping rates in the 0-.25% range through 2014 we can probably look forward to additional drops- at least for a while.

  2. 2

    With Beginning Pay Being Downgraded

    To $9/hr with no benefits for GM small car production worker wages [Obama’s Car Czar says that wage is too high BTW]….or Seattle Boeing Machinist pay at a high [with intensive training before hand] of like $15/hr; even keeping interest rates at the 0% Japanese style Zombie Rates today is a moot point, without wage hikes Seattle real estate prices are vectored downward.

  3. 3
    MacroInvestor says:

    Yep, the low rates are great if you plan on sitting on your depreciating asset. They’re a horrible trap for anyone buying. Eventually rates will climb back and it will seem like sticker shock. You’ll hardly find anyone with the ability to buy your house. If you think things are tough out there now, just wait.

    Don’t think rates will ever rise? Just look at Europe. Those governments can’t pay their bills and rates are sky high. Eventually that happens in the UK, Japan and finally the US. Spending that’s double the income cannot be fixed.

  4. 4
    patient says:

    Today’s low rates pretty guarantees that prices will not experience a sustained increase in a very, very long time. Until rates come back to more normal levels it’s a big fat warning sign to buy.

  5. 5

    RE: MacroInvestor @ 3

    Good Point

    We assume status quo, like Japan and China not selling our debt and leaving the American tax payer with these options:

    Raise taxes to absorb the debt and further errode the scarce depressionary job market.

    Print more money to make up the massive difference when China/Japan cash in their American chips and watch oil/food sky-rocket like during QE1 and QE2; with the dollar simultaneously devaluing…..

    Yeah, we may keep interest rates down and watch i.e., gas hit $10/gallon…..

  6. 6

    RE: patient @ 4 – Don’t forget, FHA loans are typically assumable, so those buyers going FHA today will be in a more favorable position once rates go up.

  7. 7
    Scotsman says:

    RE: MacroInvestor @ 3

    That which can’t be paid won’t be paid, whether debts, entitlements, pensions, etc. I really don’t think we’ll see rates rise that much. Remember, we are esentially buying our own debt now as the Fed’s balance sheet expands. The next step will be to follow Greece and negotiate the balance owed down in chunks until it disappears or at least becomes managable.

    If there were real markets that responded to fundamentals then the story would be different. Instead we will get a managed decline run by governmental and banking interests.

  8. 8
    Scotsman says:

    RE: Kary L. Krismer @ 6

    I’m pretty sure before this is over any loan that the government has an interest in will be renegotiated both as to rate and amount. In the past I would have dismissed such claims but obviously the old rules no longer apply.

    How do you eat an elephant? One bite at a time. We’ll see a thousand little cuts and adjusments, none so large at a single time as to get the general population as a whole wound up. Gotta maintain order and all that through the decline.

  9. 9

    RE: Scotsman @ 8 – What I was referring to is when they sell, their existing mortgage will have value which they can recoup.

    http://blog.seattlepi.com/realestate/2010/06/02/should-a-buyer-with-20-down-get-an-fha-loan/

  10. 10

    RE: Scotsman @ 8

    Yes Scotsman

    I agree, status quo is gone.

    On tax deductions [i.e., real estate loan interest] not being the same as cutting other government costs is a ludicrous comparison. When federal government costs exceed a massively dwindling tax receipt base the last several years [what is it now, 40-50% less than the tax receipt base of like 2006?]; tax credits, deductions, etc are all to blame too for the lack of tax income receipts to pay for federal services we all use.

    There is no sacred cow, let’s face it.

  11. 11

    RE: Scotsman @ 8

    On FHA Loan Guarentees

    Again, no sacred cows…..we’re entering the Twilight Zone, fasten your seat belts for the ride.

  12. 12
    Blurtman says:

    The banksters run this country, and when they demand free money to speculate to bail themselves out, they get free money to specualte. The rest of you can go screw yourselves. If you don’t like it, write in William K. Black for President.

  13. 13
    Scotsman says:

    RE: Kary L. Krismer @ 9

    I understood you. What I’m saying is that just because a government policy exists today doesn’t mean a thing as far as what it will be tomorrow or the week after. We are entering a phase where the rules are made up and changed as needed. The ends justify the means.

  14. 14

    Historically, interest rates have had a pretty big influence on both home sales and home prices. When interest rates rise, it tends to both lower home sales and home prices, and when interest rates get low, home sales and home prices tend to increase.
    But this time things are different. Interest rates have remained quite low for a few years. Sales are up slightly, and home prices are continuing to decline.
    So why would low interest rates “guarantee” that home prices won’t rise, as Patient says in post#4? Shouldn’t prices go up as interest rates continue to decline?
    Maybe they should in an ordinary world, but we’re not living in ordinary times. Corporate earnings are up. Doesn’t that put more money in people’s pockets? Stock prices are up, doesn’t that provide more money for people to buy houses with?
    Sorta kinda. I think the thing that drives home prices more than that is household income. Between high unemployment , a declining middle class, and tighter lending standards, there are less people out there who feel that they are able to afford to buy houses, even at lower prices and low interest rates. The housing market hasn’t stabilized, and until it has, it’ll take more than low interest rates to get people excited about home buying.

  15. 15
    patient says:

    RE: Ira Sacharoff @ 14

    Prices could very well increase temporarily as interest rates continue down but it’s not sustainable to build price upon interest rates. In a future post bubble, post crisis era when the economy is based on healthy sustainable factors and not decided by crisis management rates will be higher, much higher and prices will be pushed down, the risk of finding yourself underwater is significant. Buying in a crisis is good if you get bargain prices but not if you get inflated prices due to unsustainable low interest rates. Both is ideal and we could hit such a sweet spot but it’s not now at least not in Seattle.

  16. 16
    Scotsman says:

    “The US economy, if marked to market, is broke. Take home pay for all taxpayers is now only $6.2tn, down from $7tn at its peak in 07, and additionally we have created $5tn of new debt since the start of QE1 and owe a PV of $50tn in ‘unfunded’ liabilities leaving the future looking quite grim ”

    Utter nonsense- it’s a great time to buy! Interest rates are at record lows, homes have rarely been this affordable, unemployment is falling, domestic manufacturing (good middle class jobs) is increasing, etc. Get out there and . . . SHOP!

    Ira- we’re going to have to send you back to remedial realtor speak school if you don’t start “talking your book.”

    http://www.zerohedge.com/news/biderman-explains-bullish-market-ponzi

  17. 17
    MacroInvestor says:

    RE: Ira Sacharoff @ 14

    You misunderstood Patient. He was saying the same thing. Historically low interest rates implies higher rates in some future. (Scotsman is right… that could be far in the future.)

    Rising rates –> pressure on prices. May still go up because of other factors we can’t predict, but that is a gale force wind in your face.

    I would prefer to be buying at historically high rates. Low rates are scary.

  18. 18
    Scotsman says:

    Here’s my last point on this- and it’s important. People need a place to live. I honestly believe that the effective floor to housing prices is found in the relationship with rents, much more so than income, interest rates, shadow inventory, etc. This is still a very wealthy country by world standards with a lot of money looking for a return on capital. With a stock market probably close to its peak, money will start to move, looking for returns. My guess is some of that will start to buy tangible goods, something with real value and utility. Something like housing. And as the rest of the world looks for a place to store money in the face of increasing instability some foreign money will find its way here too- and into housing. Ever lower interest rates make traditionally secure investments like bonds less attractive. But at the same time you can buy an income producing asset for little more than its face value. Why not property?

    Remember- housing is a little different- people have to have a place to live. As long as there is some government there will be enough of a tradition to maintain property rights and a claim on income streams. And if there isn’t any government, how important is any of this?

  19. 19
    Scotsman says:

    RE: Scotsman @ 18

    To wrap up the above- over the next 4-6 years housing may not be the potential disaster some think. After that, who knows?

  20. 20
    patient says:

    RE: Scotsman @ 18

    If owner costs equals renting it is true that owning makes more sense than now BUT if the risk of ending up underwater is significant it is still not a stable price foundation. You can have a situation where the majority can afford a monthly rent but lack the ability to purchase a home with the same monthly cost. An imploding FHA is such a scenario or another national or global banking meltdown non of which are very remote possibilities. And if you are going to foot the bill for 30 years or even 15 it makes a lot of sense to look beyond just the monthly cost.

  21. 21
    Scotsman says:

    RE: patient @ 20

    “You can have a situation where the majority can afford a monthly rent but lack the ability to purchase a home with the same monthly cost.”

    Bingo- that’s my point. That’s your rental market, a floor for home prices as investors with real money (foreign and domestic) start to step in. Remember- they get depreciatiion write-offs that help counter any real drops in the asset value so future price declines have less impact on their financial calculations.

    A boom in housing prices? Probably not. An effective floor? A better chance now than last year.

  22. 22
    patient says:

    RE: Scotsman @ 21

    Good point but I doubt investors will be able to absorb the amount of units that are already in the pipeline and even less the number if something further happens to the availability of low downpayment, low interest mortgages. We’re talking big numbers of a stained asset class. Risky to say the least. I think materials and energy will continue to be far more palatable.

  23. 23
    patient says:

    There is also a good chance that prices and rents will fall in tandem, in tough times there are more desperate landlords and as more rentals are beeing put on the market… It’s a gamble to say the least.

  24. 24
    Scotsman says:

    RE: patient @ 22

    Math, my friend. Total value of U.S. housing stock in 2002 (about current price levels?)- $23.2T, one third of which was owned free and clear. So let’s say $16T that is to some extent subject to a mortgage or lien. Only a fraction of that is for sale at any one time.

    Total value of world stock markets (not including bonds, precious metals, etc.) in 2008, after the crash of the U.S. markets- estimated at $45T. The U.S. is about 1/3 of that, or $15T. Probably higher now.

    In short, it seems that a 10% move out of U.S. stocks and into housing would be enough to pay cash for asnything that might come up for sale, assuming 6% of total housing is for sale at any one time. With leverage, i.e. investor level financing, even a 5% move of wealth from U.S. stock markets to housing would have a significant impact on stabilizing pricing, perhaps even moving it up.

    Gotta run.

  25. 25
    MacroInvestor says:

    RE: Scotsman @ 18

    You sound the agents who cry “they ain’t making any more dirt”. Well, they are. Look at how the boonies spread further and further out. Your investment has a lot of competition.

    You also sound like you think investors are sitting it out. Plenty of large ones have been there all along.

    I would agree that value is defined as present value of income stream. However, income stream can go up or down. Down in a recession. Down when employment and/or wages decline. Down when gov’s have to raise taxes and cut back north of $1 trillion a year. That means down for years and years. But, yes — this will end.

  26. 26

    RE: patient @ 23

    Yes Patient

    I remember before 1980 and before the Baby Boomers all looking for homes at once, minimum wage [it was like $1/hr back then] got ya an apartment, car, food and money left over for pizza and beer….

    Does today’s $8/hr even get ya a car and food, let alone a roof and utilities in Seattle?

    It was like 2 to an apartment in the 80s on minimum wage….today its morphed to 4-5 to an apartment at today’s high rents?

    Wages dictate rent demand, whether we like it or not…..eventually lower and lower wages leads to empty apartments, more gypsies living in each unit, which leads to lower rents, like all 3rd world countries know….the apartments get run down too.

  27. 27
    patient says:

    RE: Scotsman @ 24

    Not very convincing I’m afraid. The asset math is one thing the guess about where the funds will move is anything but scientific. I’m highly skeptical that real estate will come back in fashion anytime soon. We’ll see but it’s not something I would bet on.

  28. 28

    RE: MacroInvestor @ 25
    Total Money Supply is Like a Pie at Dinner

    The more that sit at the table, the smaller the pieces get….

    The number of millionaires are shrinking in America too….the pie size is getting smaller too, with resource shortages…is there an end to this vicious cycle?

  29. 29
    Ray Pepper says:

    RE: softwarengineer @ 28

    “is there an end to this vicious cycle? ”

    of course there is: http://www.deathclock.com/

  30. 30
    patient says:

    RE: Ray Pepper @ 29

    Our own pro investor, what say you about the investors capability to absorb “they are all coming back” and make up for the stuck move up buyers and unemployed would be first time buyers? Do you think it’s likely?

  31. 31

    By Scotsman @ 21:

    Bingo- that’s my point. That’s your rental market, a floor for home prices as investors with real money (foreign and domestic) start to step in. Remember- they get depreciatiion write-offs that help counter any real drops in the asset value so future price declines have less impact on their financial calculations.

    Also, if they take a loss, it can be offset against other capital gains, or to a limited extent, ordinary income.

  32. 32

    By patient @ 23:

    There is also a good chance that prices and rents will fall in tandem, in tough times there are more desperate landlords and as more rentals are beeing put on the market… It’s a gamble to say the least.

    The biggest risk the the rental market is that Section 8 will dry up.

  33. 33
    patient says:

    RE: Kary L. Krismer @ 32

    Care to expand? What is section 8?

  34. 34

    RE: patient @ 33 – I did expand, and then deleted it as ranting! ;-)

    Section 8 is where disabled people get rent support from the government. That’s all well and good, except the government does a horrible job at screening people. So what you end up with in one case I am familiar with someone dealing drug on a fairly high level, but only paying 15% of their rent. Or in another case, being qualified for Section 8, but driving a fairly nice BMW.

    What section 8 does is drives up both rents and house prices, because there are quite a few people on section 8. If it went away, a lot of landlords would be unhappy, because rental rates would fall.

  35. 35
    Ray Pepper says:

    RE: patient @ 30RE: patient @ 30

    there is so much more Fed Stimulus coming in the years ahead along with MASSIVE programs to keep people paying their upside down mortgages that I recommend keep looking for those GEMS, walk from all multiple offer scenarios, and take your time…Everyone will need to sell far more then investors need to buy.

    Slowly trickling into the Trustee Sales are better deals but they are still few and far between..

  36. 36
    Ray Pepper says:

    RE: Kary L. Krismer @ 34

    We have had about 20 section 8 tenants over the last 10 years and none of those incidents as you described occurred. None were disabled either..All were single mothers and their children.

    I believe Section 8 does screen very good initially to qualify but in the end its up to the homeowner to make the final decision to accept their tenancy.

  37. 37

    RE: Ray Pepper @ 36 – I’m sure there are a lot of good people on Section 8. I don’t have a problem with the program in general, just the screening.

  38. 38
    Ray Pepper says:

    RE: Kary L. Krismer @ 37

    again the screening initially is very good because its increasingly difficult to get into the Program..

    You might want to read this Kary to enlighten and educate: http://prospect.org/article/false-accusation

  39. 39

    RE: Ray Pepper @ 38 – Yes, I’m sure Section 8 is the one area where the government actually does a good job handing out money. /sarc

    BTW, how many of those 20 tenants who were women with children voluntarily quit the program when they had a boyfriend move in with them? That’s another Section 8 violation I’m personally aware of.

    And you’re right the program is hard to get into. Ridiculously hard. I think they only open it up every one or two years. If they were better at screening, it wouldn’t be so hard to get into.

  40. 40
    patient says:

    RE: Ray Pepper @ 35

    I would think that’s common among investors. They want to maximize profit and by at fire sales and it seems unlikely that they will all of a sudden start buying at list prices and keep prices afloat. They have no emotional attachment to the properties and will walk if it’s not a bargain. I think it’s the common man that will need to put in a bottom when the time comes.

  41. 41
    David Losh says:

    RE: Scotsman @ 18

    The tangible goods investment happened in the tech boom, then there was the dot com crash, and after that we had the historically low interest rates.

    The residential market is saturated with housing units, with an ability to build millions more quickly.

    You could compare housing to the automotive industry. There are some classics, but some of those are being replaced with new construction. Housing is getting to be expendable.

    Investors, with these low rates, would be many dollars ahead by retooling a plant for manufacturing. I said three years ago that if I had cash I would buy in the rust belt.

    Jobs will be where the biggest returns are for passive income, and cash on cash investment.

  42. 42
    ChrisM says:

    Section 8 – I wonder if it varies by state? In Phoenix, I viewed it as a disaster. These guys in CA are more positive:

    http://patrick.net/forum/?p=1181334
    http://patrick.net/forum/?p=494764

  43. 43
    Peter Witting says:

    I would not like Section 8 tenants in my house or neighborhood, for that matter. Take all that is generally considered undesirable about rentals – turnover, lack of stability, don’t maintain yards, absentee landlords, poor interior and exterior maintenance – and multiply it by four. That is your stereotypical Section 8 housing**.

    ** Obviously this statement is a generalization intended to illustrate my experience; your milage may vary.

  44. 44
    Haybaler says:

    RE: Scotsman @ 18

    Every time I read this argument about housing prices being correlated to Rents ….I think of my last visit to family in Anthony, Kansas.

    Anthony is a small town about 45 minutes south of Wichita, Kansas….about the same as Tacoma from Seattle. Anthony is characterized by clean tree lined streets, w/ housing ranging from early 1900’s to new, on large flat lots.

    I picked up a local paper to see what was going on and saw an ad for an auction of local homes. Non bank owned, non foreclosed, just normal for sale inventory. Upon inquiry I was told that auctions are a normal marketing tool in the midwest.

    I attended the auction. All of the homes sold for amazingly low prices….like $5K -$25K.

    But the ones that struck me were the income properties like the brick Four-plex, fully occupied by long term tenants-retired folks. No visible property defects. Rents are $350/unit/mo. = $1400 (separately metered). Sale price of $25K.

    Is that where we are going?

  45. 45
    Haybaler says:

    RE: Kary L. Krismer @ 34

    Tacoma Housing Authority rent allowances are generally a bit below fair market value while…. Pierce County Housing Authority rent allowances are generally a bit higher than fair market value.

    Recently HUD ordered the local Housing agencies to establish a plan for cutting housing subsidies as a result of Federal budget cuts. As a result Pierce county Housing Authority sent letters around to all of their “clients” stating that nobody will be allowed to move into a unit that is more expensive than their current lease amount..and at renewal everybody should expect subsidy cuts.

    The result will be to force some families to move into less desirable housing when landlords decline to accept 10% rent reductions. Of course some landlords will accept the lower rates.

    I agree that Subsidies tend to support the rents in the junkier units as the recipients of the assistance are mandated to live in housing within a specified price range. Landlords who accept Section 8 limit their income from a nice clean desirable property but receive rental amounts that would be impossible in the free market for junky places.

  46. 46
    Scotsman says:

    RE: Haybaler @ 44

    You can find similar (but not quite as extreme) situations in parts of eastern Washington, especially for the income properties. Not so many good jobs, but lots of retired folks and income properties that cash flow from day one. Retired and not quite broke boomer havens?

  47. 47

    […] excellent example of the “low rates” hype I mentioned yesterday. I doubt we’ll be reading “white papers” from John L. Scott touting the […]

  48. 48
    Chris says:

    RE: Kary L. Krismer @ 39
    I’m with you on this one Kary. I had a nightmare with a rental property on Section 8 that showed how messed up these programs can be. I thought I was doing someone with a disabled kid a favor. She moved two pit bulls in and caused a lot of damage to the property. The person handling it on the government side really didn’t care when the neighbors had fits and covered for her. Some of the damage in hindsight was pretty funny. The pit bulls gnawed most of their way through a wall and she stole a metal “no diving sign” from the common area and put that in the hole, writing side out. She left paperwork behind when she finally left – she was on every conceivable government program. She claimed her kid was disabled but after I got back in, the neighbors said they never saw him. Easily the worst tenant ever. Number two isn’t even close.

  49. 49
    Betsy says:

    Can anyone explain the due-on-sale clause and how this could play out with rising rates? I saw this link on Patrick.net and confess that the article made my brain bend.
    http://firsttuesdayjournal.com/the-due-on-time-bomb/

    Thanks.

  50. 50
    2kt says:

    RE: Scotsman @ 1

    The consensus is rates will stay low for the next three years. Time to short bonds!

  51. 51
    2kt says:

    RE: Scotsman @ 18

    Investment money already moved in the housing and continues to do so. Insurance companies can not sustain margins with government paper yields so low. Hence they creates pools and pools have been buying residential and commercial real estate. Yields in some areas on residential are better than high-yield corporates.Unless housing inventory suddenly increases from the so-called shadow inventory, the bottom will be established in the next 6-12 months.

  52. 52
    Blurtman says:

    More bullshit on the way from Obummer. See, he is doing this to help you, not the banks.

    “The Obama administration on Friday announced it would significantly broaden the pool of consumers eligible for mortgage modifications by opening its program to owners of rental properties and homeowners burdened by medical and credit card bills and second mortgages.

    Under an expansion of the Home Affordable Modification Program, investors can seek mortgage loan modifications for rental properties, regardless of whether the home is occupied by a tenant or it is vacant but the owner plans to rent it. Previously, only owner-occupants were eligible for loan modifications under the government’s plan, but officials said they decided to take this step because foreclosed rental properties were having a particularly detrimental effect on low- and moderate-income renters.

    “The whole purpose of HAMP is to try and prevent foreclosures,” said Treasury Assistant Secretary Tim Massad in a conference call with reporters Friday afternoon. “We’re expanding it to investor-owned properties for the same reason. If your neighbor is foreclosed on, whether they’re an owner or a tenant, that affects you and all your neighbors. We’re allowing them to get modifications. They still have to prove a hardship and go through a protocol that proves this is a good use of taxpayer money.”

    http://www.chicagotribune.com/business/breaking/chi-administration-looks-to-extend-mortgage-mods-to-rental-properties-others-20120127,0,7814725.story

  53. 53

    RE: Betsy @ 49
    The due on sale clause means that whatever you owe on the house needs to get paid back to the bank in full when you sell it. Before the due on sales clauses were as common as they are now, you could sell your house to someone and they could potentially take over your loan and your payments. Right now only FHA loans are assumable. I think the thinking behind the ” due on sale time bomb” is that interest rates are going to significantly rise, and nobody is going to want to buy a house if they have to pay 15% interest. But if they could just assume your 4% interest rate, that would make people much more able to buy property. Personally, I don’t see a major rise in interest rates as inevitable or a sure thing at all. The last few years we’ve heard nothing but ” Interest rates can’t go any lower”, and then they’ve gone lower. And maybe they won’t go lower, but it sure doesn’t look like we’ll see much of an increase in rates if at all over the next few years.

  54. 54
    Ray Pepper says:

    RE: Blurtman @ 52

    “More bull”chocolate” on the way from Obummer”

    Never underestimate the POWER of further FED STIMULUS! This remains the X factor in the housing recovery duration and when homes will cease to decline in value. Fed stimulus is a wonderful thing as long as you continue to have homes on the books!

    Onward Obama! Investors are people too!

  55. 55

    By Peter Witting @ 43:

    I would not like Section 8 tenants in my house or neighborhood, for that matter. Take all that is generally considered undesirable about rentals – turnover, lack of stability, don’t maintain yards, absentee landlords, poor interior and exterior maintenance – and multiply it by four. That is your stereotypical Section 8 housing**.

    ** Obviously this statement is a generalization intended to illustrate my experience; your milage may vary.

    I’m not sure those are problems with Section 8. The stability is relatively good, assuming they don’t use some system with lag issues for what they’re allowed to pay the landlord. There are periodic inspections of the property (which is part of what bothers me because they apparently don’t notice $2,000 televisions during the inspections). And to continue to qualify for Section 8, the tenant does have to keep the property in good condition.

  56. 56

    By Betsy @ 49:

    Can anyone explain the due-on-sale clause and how this could play out with rising rates? I saw this link on Patrick.net and confess that the article made my brain bend.
    http://firsttuesdayjournal.com/the-due-on-time-bomb/

    Thanks.

    That’s a very poorly worded article, and not terribly accurate either (e.g. not all deeds of trust have due on sale clauses).

    It’s really quite simple. If the deed of trust has a due on sale clause, then the entire balance of the deed of trust is due on the sale date. Unless the loan is assumable, the buyer cannot take the property “subject to” the deed of trust. If they do buy the property and the lender notices, the lender can initiate a foreclosure action, effectively forcing the buyer to refinance to save the property.

    In this particular market, lenders are not terribly interested in enforcing due on sale clauses. Even so, apparently some sales are being done without the buyer recording their deed and/or buying on a non-recorded real estate contract. I would not recommend either practice.

  57. 57
    Jonness says:

    By Blurtman @ 52:

    Under an expansion of the Home Affordable Modification Program, investors can seek mortgage loan modifications for rental properties

    I’m beginning to out and out despise this poser Obama dude. What a total horse’s anus. America, wake up!

    What ever happened to the free market? When you make a bad investment decision, you lose.

    There is a really simple fix that could turn this country around in no time. Get a whole lot of piano wire and have a nationally televised public hanging of all the politicians who have taken hand outs from lobbyists. We can pay for it by holding the hanging in a big stadium and selling tickets, T-shirts, popcorn, and beer. Once we get em all lynched, we can simply start over.

    But it does create a bit of a dilemma. How do we choose who to hang first? I mean, between Gingrich and Obama, it’s a really tough decision. We could have them draw straws, but then again, perhaps a wresting match would be more entertaining. Winner escapes the hanging, but has to fight the next guy in the queue. At the very end, there is one guy left standing, and he gets to live out the rest of his life on a chain gang. I mean, it pays to be a humanitarian about this.

    Of course, to get the best bang for the buck, we would have to consider proper costuming. We could dress Obama up as an English knight, and Gingrich could wear a pink ballerina suit. And don’t forget the instant replay.

  58. 58
    Blurtman says:

    RE: Jonness @ 57 – Consider that in the State of the Union address, Obama announces “No more bailouts.” and then institutes a bail out of rental property investors, and the banks as well.

    Join the revolution. Write in William K. Black for President.

  59. 59

    As a mortgage originator, I have to admit I feel like “chicken little” when I warn of mortgage rates rising :)

    Rates and mortgages are getting more expensive. The upfront and monthly mortgage insurance premiums that are wrapped into the low FHA rates (high 3s currently) is roughly the same payment you would have on a 30yr mortgage with rates in the mid-5s. Eventually the mi will drop off but if the borrower did minimum down, it’s going to take about 10 years.

    I’m also seeing many lenders increasing their “price adjustments” which are factored into rates for programs they consider riskier, like investment or cash out refi’s.

    We also have the temporary payroll tax cut which has caused banks and lenders to pad rates as well… in addition to using this as an excuse to completely jack up the cost of extending a mortgage rate lock commitment. It used to cost 0.125% for a short extension (7 days) if your transaction did not close on time – now most banks are charging 0.625% blaming the “g-fee”.

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