Rate on 30-year home mortgage drops to record 3.88%

January 19, 2012 by · Leave a Comment
Filed under: Real Estate News 

This is great news if you have solid employment, 20% down payment range and good credit.   My from perspective we can have 1% mortgages rates and 100K average home prices and it won’t matter.   People need jobs and income that support these types of debt service levels.  Rates will continue to fall until the market finds a rate the works for our current economic situation.  With more jobs being sent overseas and income stay flat if not declining, I see these rates going even lower.

In the end, it comes back to what I have been writing on Bank REO from the beginning.   We have a debt problem and that will need to be handled in the only manner that people like Walter Bagehot wrote in his seminal book “Lombard  Street”.  You extend credit the the “solvent” banking institutions and let the insolvent banks fail so you can clear the market of the “bad money” as Gresham put it.   Bad money always chases good money out of the market until it is brought out of the market.

What I am saying is that most of our major banks are carrying loans and mortgage on their books that will never be paid off and they need to be written off and at that point you need to increase capital to cover these losses or go out of business (or be acquired).   You would be surprise how quickly we would bounce back if we flushed this debt from the system and started hardcore on re-balancing our major entitlement programs.    If you think that we need these large banks, think about how many regional banks we have that would be able to meet this demand and if that wasn’t enough, I think there might be a few billionaires that would throw their proverbial hat in the ring to make good loans.

We say we want free-markets and capitalism but reject the most important part, letting companies fail no matter what.  Banks will always be needed so we should not worry that they will disappear.   If you agree or not leave comments below and please call your representative.

ABC News & AP – The average rate on the 30-year fixed mortgage fell again this week to a record low. The eighth record low in a year is attracting few takers because most who can afford to buy or refinance have already done so.  Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage dipped to 3.88 percent this week, down from the old record of 3.89 percent one week ago.

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Mortgage Rates on 30-Year U.S. Loans Fall to 4.99%

January 21, 2010 by · Leave a Comment
Filed under: Real Estate News 

Very interesting the long bond dipped below the 5% mark, this may be a sign that we are in for some deflation?  Maybe not and its just a temporary dip while the market figures out what direction we are heading.  I do think we will see some home buying stimulated with these low rates but it will be harder with the FHA increasing their lending standards even though this is a good thing for the long-term.

Mortgage rates in the U.S. dropped for a third week, lowering borrowing costs for consumers and supporting government efforts to boost the housing market.

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Interest Rates on 30-year loan in U.S. rises to 5.03%

October 29, 2009 by · Leave a Comment
Filed under: Real Estate News 

Looks like the Federal Reserve will need to purchase more mortgage-backed securities or we are going to see interest rates on home loans rise to reflect the real risk in the economy.  So far as stated by many news outlets including AP, the Fed has already purchased $1.25 trillion dollars in MBS bonds from different banking institutions.

If we see rates rise much further then we will see a slowdown in the real estate recovery and that will most likely bring us back into the recession.  In other news, the Gross Domestic Product (GDP) in the U.S. rose to an annualized rate of 3.5% in the latest reading.

Associated Press, Washington D.C.:

Rates had hovered below 5 percent for nearly a month until last week. They hit a record low of 4.78 percent in the spring, but are still attractive for people looking to buy a home or refinance.

The rates have advanced despite action by the government to prop up the housing market and stimulate the economy. The Federal Reserve has pumped $1.25 trillion on mortgage-backed securities in an effort to lower rates on mortgages and loosen credit.

Rates on 30-year mortgages traditionally track yields on long-term government debt.

Still, lenders have tightened their standards dramatically, so the best rates are available only to borrowers with solid credit and a 20 percent down payment.

Source: AP