Can't you get around jumbo loans by having 2-loans (eg: 80/20, etc)? If not, the high rates on jumbo loans will impact a mojority of SFR buyers on the eastside?
I'm not an expert, but if the 80% is $417K, then the max price of the house you can buy is $521K + downpayment. This indeed should should put downward pressure on prices on the Eastside, where you cannot buy anything decent for less than $550K.
I'm surprised that there's not been more discussion on this topic. Don't people see the jumbo-loan-rate-hike impacting the local market? OR am i missing something?
remember: for the folks with great credit, loans are still available. Yes, a person could go 80/20, but the interest rate on the 2nd mortgage would be high.
Now we have a secondary problem entering the market: liquidity. There are fewer buyers for second mortgages, going all the way to 100% LTV, UNLESS the person has a great credit score.
So, with eastside homes, IF the folks with less than desirable credit scores are still putting LOTS of money down, all's well. But we know this most likely is not the case in all eastside home purchase circumstances.
Also, some eastside home purchasers come in with all cash, or a huge downpayment. I would guess that's not the case (on a regular basis) for neighborhoods like, say, Everett or Kent.
When I was looking for a $600-700 house on the Eastside early this spring, the best deal that my mortgage broker was able to get (with 5% down) included a jumbo loan. Right now, although I'm earning pretty high wage, my move into the market would be more expensive than several months ago.
"Rising home prices were the oil that greased the wheel of this engine of growth, and falling home prices are the sand in the gears that are causing it to grind to a halt."
This is a big thing for those with risky loans that are waiting to refinance. Makes it difficult and espensive to refinance into more stable loans. Perhaps, this will spill into the prime mortgage owners that took out risky loans.
This seems like a very big deal to me. Given our current median price, almost half of the homes out there can not be purchased (even with 20% down or an extra 20% 2nd loan) without triggering an almost 8% rate. That is no small addition to someones monthly payment. Not to mention the psychological impact- I haven't paid 8% interest on anything ever (credit cards, cars, student loans etc). I am prime home buying demographic and an 8% rate would make me walk away in a second. This isn't about risky loans or sub prime loans. This is about a huge chunk of our market that just got a whole lot more expensive.
Can't you get around jumbo loans by having 2-loans (eg: 80/20, etc)? If not, the high rates on jumbo loans will impact a mojority of SFR buyers on the eastside?
I have no reliable source but I've seen some brokers posting that they can do seconds up to $1M, regardless of the LTV.
On first glance this seems incredible, but so did 0-down loans to people with no income/assetts and we all know what happened there.
please dont take this the wrong way, but the reality of never paying more than 8% interest is that you have been spoiled (not just you personally, but everyone who thinks low rates are normal).
it appears your first experience with credit has been in a period of time with abnormally low interest rates. used wisely, its been great. but being able to remember 13% interest rates on homes (thats 30 yr fixed with great credit), from my experience, the low rates in the past 6 years have been the exception, rather than the rule. and becasue rates have been so low, it has amazed me why anyone would have wanted anything other than a fixed rate loan.
unfortunately, i think at some point your going to wish you would be able to find an 8% loan. i know i wished that when i was paying over 10%
But mking....When you were paying 13%, wasn't the median home price 2x median income? Whatever savings this generation has gained in historically low interest has been more than compensated for by the increase in prices...
Does anyone actually see price drops of Seattle homes in the coming months to make up the difference that (non-conforming) buyers now must pay in interest?
Any speculations on how long it will take for last week's events to influence sellers enough to adjust prices downward?
I definitely get that I have been spoiled and that it could (and probably will) get much much worse. My point is that it will take a while for people who are used to the good rates to adjust. In the mean time they will choose to walk away.
As far as the impact on prices, I think it will take a while for sellers to realize what is happening. They will have just as hard a time accepting the perfectly good $600000 offer on their $650000 house as it is for me to accept the perfectly good 8% it would take to buy it
i dont recall the interest rate on my first mortgage, but i know i was excited when we refinanced and got down to about 10%. didnt take any cash, just got a better rate. that was about 1990. the home (a modest rambler in federal way, 1500 sf) was $120k, which was 4x my annual income at that time. i had a fairly good job (required a 4 yr science degree) at the time. sold the home 7 years later, for $132k. 12k appreciation in 7 years.
my point? RE in the last 5 years has been anything but normal.
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Now we have a secondary problem entering the market: liquidity. There are fewer buyers for second mortgages, going all the way to 100% LTV, UNLESS the person has a great credit score.
So, with eastside homes, IF the folks with less than desirable credit scores are still putting LOTS of money down, all's well. But we know this most likely is not the case in all eastside home purchase circumstances.
Also, some eastside home purchasers come in with all cash, or a huge downpayment. I would guess that's not the case (on a regular basis) for neighborhoods like, say, Everett or Kent.
In a Credit Crisis, Large Mortgages Grow Costly
"Rising home prices were the oil that greased the wheel of this engine of growth, and falling home prices are the sand in the gears that are causing it to grind to a halt."
I'm starting to think it won't end well
with no points the rate was 8.25%
ouch :shock:
I have no reliable source but I've seen some brokers posting that they can do seconds up to $1M, regardless of the LTV.
On first glance this seems incredible, but so did 0-down loans to people with no income/assetts and we all know what happened there.
Anyone else heard of these "jumbo seconds"?
This is the true pressure on the market. Expect things to go downhill pretty quickly from now on.
it appears your first experience with credit has been in a period of time with abnormally low interest rates. used wisely, its been great. but being able to remember 13% interest rates on homes (thats 30 yr fixed with great credit), from my experience, the low rates in the past 6 years have been the exception, rather than the rule. and becasue rates have been so low, it has amazed me why anyone would have wanted anything other than a fixed rate loan.
unfortunately, i think at some point your going to wish you would be able to find an 8% loan. i know i wished that when i was paying over 10%
Does anyone actually see price drops of Seattle homes in the coming months to make up the difference that (non-conforming) buyers now must pay in interest?
Any speculations on how long it will take for last week's events to influence sellers enough to adjust prices downward?
As far as the impact on prices, I think it will take a while for sellers to realize what is happening. They will have just as hard a time accepting the perfectly good $600000 offer on their $650000 house as it is for me to accept the perfectly good 8% it would take to buy it
my point? RE in the last 5 years has been anything but normal.