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Rates.....How low can they go

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Not me...the big banks made their own predictions. I just read up daily. :)

I was in Vegas for the past week with a VP at a huge bank who packages and sells billions in MBS. Rumor has it that there is a monster government program in the works that will effectively refi any owner occupied regardless of LTV into a 3.5% fixed rate. Consider this a rumor at this point, but the source is solid. Don't know IF, WHEN, or CONDITIONS of this program will be announced, but keep this info in the back of your mind if you are looking to refi. I'd hate to see someone drop a few grand on refi costs unnecessarily. And if my source is right, we'll see it sooner than later.

I don't want to turn this thread into a soapbox on government intervention. Just putting out the possibility that a mortgage rate trump card is about to be thrown.

I can see the possibility of this scenario occurring, I would not agree with it if it only involves the Government , but I don't see this market turning for sometime unless the hole is plugged, this may be the only avenue left.

3.5%.......its headed that way now, and in 2 weeks if the Fed buys as anticipated then I will pull the trigger soon after.

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Not me...the big banks made their own predictions. I just read up daily. :)

I was in Vegas for the past week with a VP at a huge bank who packages and sells billions in MBS. Rumor has it that there is a monster government program in the works that will effectively refi any owner occupied regardless of LTV into a 3.5% fixed rate. Consider this a rumor at this point, but the source is solid. Don't know IF, WHEN, or CONDITIONS of this program will be announced, but keep this info in the back of your mind if you are looking to refi. I'd hate to see someone drop a few grand on refi costs unnecessarily. And if my source is right, we'll see it sooner than later.

I don't want to turn this thread into a soapbox on government intervention. Just putting out the possibility that a mortgage rate trump card is about to be thrown.

I don't think that's entirely a bad idea since it would probably put the breaks on much of the tactical foreclosures that are happening. Also it would be better overall to do it this way than for the Fed to buy more mortgage backed securities to stimulate the economy (aka "quantitative easing"...also known as printing more money) which will only lead to a harsh bout of inflation when things start to level off.

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Not me...the big banks made their own predictions. I just read up daily. :)

I was in Vegas for the past week with a VP at a huge bank who packages and sells billions in MBS. Rumor has it that there is a monster government program in the works that will effectively refi any owner occupied regardless of LTV into a 3.5% fixed rate. Consider this a rumor at this point, but the source is solid. Don't know IF, WHEN, or CONDITIONS of this program will be announced, but keep this info in the back of your mind if you are looking to refi. I'd hate to see someone drop a few grand on refi costs unnecessarily. And if my source is right, we'll see it sooner than later.

I don't want to turn this thread into a soapbox on government intervention. Just putting out the possibility that a mortgage rate trump card is about to be thrown.

I hope this is true (or turns out to be true). I just looked online and at best I could sell my home for $120k, the note is around $140k (I paid $186k in 2005, ugh!). I'm at 5.75% and if I could refi at 3.5% (heck even into the 4's%) I'd be a happy camper. We aren't looking to move so I hope the market recovers by the time we are (at least 5 years, maybe longer) but it's making me sick that I can't take advantage of these rates because we are upside down.

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I hope it turns out to be true. Please post as soon as you hear anything. I was looking to refinance since the rates have dropped since I bought my house, but I think I will hold off a little while longer.

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Well, JQ. Your prediction on the Fed action was pretty close to the mark. How do you think the $600MM treasuries purchase will affect home mortgage rates over the next four to six months? As far as I can tell it dropped another quarter point in just the last 48 hours.

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The $600b purchase is now a certainty. Rates may continue where they are for now...though they are nearing a bottom....I'm waiting for this stock market to tip over one more time and cause some panic buying in the bond market. I am HOPING (that's all it is) to relock my 4.875% primary at 3.875% through a streamline refi when that occurs. Right now rates on the 30 yr are roughly 4.25%.

The 15yr looks like it is at 3.50%, just a sick rate. If people can afford the payment (many can thanks to plummeting rates), I highly recommend it. The annual equity gained in enormous!!!

So we will see. At some point, the mortgage rate party will be over. Waiting too much longer is like trying to pick up nickels in front of a steamroller.

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I am also waiting to see if the bond markets panic. I do see that commodities went through the roof, within 3 days we are paying 3.10 a gl for gas again, and where this domino effect inflation stops....who knows, but rates will climb again "fast" come 2nd quarter.

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Commodities are the first to react to QE. Gold was up $41 in the first two hours of trading the morning after QE2 was announced. :shock:

The rest of the world is NOT happy. The US liquidity pump is making world markets surge, creating bubbles around the world. China and India have been very critical in the past few days along with other countries. If China retaliates by slowing or stopping the US debt purchases, treasury yields will skyrocket overnight (bond prices will collapse). Equity markets will get trampled.

QE boxes us into a corner really. I don't think it ends well, but nevermind that. Take advantage of its effects the best you can. We're all paying for it anyway...

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Waiting too much longer is like trying to pick up nickels in front of a steamroller.

Unfortunately, the house won't be ready until April (county is dragging its feet and it's not even out of permitting yet). I have to wait until March to for the paperwork to be resubmitted for final approval. Hopefully the good rates will last at least until then.

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Hehe...the predictions are going lower and are being pushed out a few months. Great for you if you can't lock until 2Q2011. fyi- a 1.75% 10yr will likely push 30yr fixed conforming rates to approximately 3.625-3.875% range.

"As for shorter-dated Treasury bonds, the sheer bulk of the Fed's buying power could be enough to keep their prices high and yields low.

'The Treasury is making them, but the Fed is buying them all,' said Tom di Galoma, head of fixed-income rates trading at Guggenheim Partners. He expects the 10-year yield to fall to 1.75% by mid-2011, due to Fed purchases and a sluggish economy."

http://finance.yahoo.com/banking-budgeting/article/111275/qe2-in-the-dock-some-yields-are-going-up?mod=bb-budgeting&sec=topStories&pos=4&asset=&ccode=

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:shock::shock: The 10yr bond continues to get slaughtered. Rates are on the move upward!!! Yikes....

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...I'm waiting for this stock market to tip over one more time

Do you mean like the last week, including today? Or do you think there is more pain to come?

By the way, little story about ATPG: I made a nice tidy profit on it way back in January or so. Then I bought in again at the wrong time, twice. Didn't want to talk about it, it was so painful. I was asleep at the wheel and didn't wake up till it had wrecked my accounts (numbers only, no selling or margin damage or anything like that.) It happened fast, too, while I sat there saying, "Duh?" It just wasn't pretty to look at and gave me an ulcer every day is what I am saying.

I sat through it and when it came back out I took my money and ran. Nothing lost in the end. So all in all, I made a tidy little gain but it was nearly a year ago.

Those people who talk about ATPG online, though - they are nasty! I got every part of my body, sight unseen, slandered on those message boards along with my character and intelligence, too, of course, just for speaking up about taking my marbles and going home. And no offense since I heard of it from you, some of them (present company excluded, of course) are a little stupid, it seems. I guess I should politely say that those type of shark-infested waters (that type of "value investing") is not for me. I'm probably not skilled enough at it and don't have the stomach for it. Glad I got out with a lesson I didn't have to pay for. I learned, that's for sure!

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Well you got out unscathed. A push is a win in these troubled times. :D

Regarding stock market, who knows what's next. Corporate profits are strong. I just think the market is ahead of itself. For the past six weeks, the announcement of QE2 is pushing money into higher beta investments. I think it is a short term pop. For a variety of reasons, I think a sizable correction is coming.

10yr yields are approaching 3.0% again. Not good for interest rates!! The 0 point 30yr rate is up 38bps in a week. That's huge. Hopefully not indicative of an inflection point. Could just be another bump in the downward trend. Let's hope!!

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10yr yields are approaching 3.0% again. Not good for interest rates!! The 0 point 30yr rate is up 38bps in a week. That's huge. Hopefully not indicative of an inflection point. Could just be another bump in the downward trend. Let's hope!!

DRAT!

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JMO, but the rates always edge up at the end of the year, every year. I think this happens for the 'end of the year' buying rush. Then they drop again first quarter.

I will look around to see if I can find something to post to back up my opinion. :)

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Denita, you might be right, but imho it has to do with treasury and mortgage backed security buying/selling at the end of the year. Investors reshuffle their allocations at the end of the year for a variety of reasons, including the tax man. And when these indices move, mortgage rates follow.

In the past week, mortgage rates shot up at RECORD pace thanks to the 10yr yield moving like a rocket as investors rushed to dump 10 year treasurys. Nothing like watching the 0 point 30yr mortgage rate move from 4.25% to 4.75% in 8 days.

OT but I am supposed to close on the rental property refi FINALLY on Monday, a mere 24 hours before my 60 day lock expires. The bank withheld financing until I made all kinds of repairs to the home, despite 28% equity and +700 FICOs. I spent last weekend installing a chain link fence, among other things.

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I agree that the source of the rate increase is tied to treasury bonds and mortgage backed security buying and selling. I hadn't really thought about it as year end positioning - but that makes sense.

Congrats on getting the refi on your rental at a good rate. Here the banks are requiring all kinds of repairs before closing - even on purchases, not just refi's. It used to be this way, years ago. What's funny is the worst properties are the bank owned properties and naturally they absolve themselves from any kind of repair! LOL

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Figures about the "self-exemption" by the banks....but as much as I complain, if I were forking over 100s of thousands of dollars, I would have even more requirements than the banks currently have, so I do see where they are coming from.

But this fence replacement issue really irked me. I don't even know if the original fence in disrepair that I tore down was even mine to begin with (it is a rowhome in the innercity). And it has to do with potential liability, something my insurer should care about, not my lender. Anyway after discussions with underwriting, they said no new fence, no new loan. So up it went. :|

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continuing the off topic...the steps in the backyard of our place were not finished when we bought the place so our bank required the steps to either be finished or removed...same type of thing you had to go through, jq

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Back on topic now...

Heard on the way in to work this morning the rate on a 30 year fixed is now once again above 5%... Anyone see this trend continuing?

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Check out the mother of all inflection points on mortgage rates. First the QE2 debacle backfired, then the deficit swelling 24 month tax band-aid. Moody's came out last week and said that there is a risk that US federal debt will be downgraded in 2011 if current fiscal conditions don't improve...yikes. Certainly not good if the goal here was to keep yields low.

http://www.bloomberg.com/apps/quote?ticker=MTGEFNCL:IND

In my case, I was 6.375 on a rental and I'm locked at 4.875 on primary. I hedged my bet here by completing the refi on the rental (3.75%) and was going to wait out rates on the primary. That's looking less and less likely now. Last I checked (Friday) super prime borrowers were at 5.125% on a 30yr fixed.

Good luck...

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Bah- can't see that site on my phone. Grr

Ever since last march when the fed got out of the mortgage rate control business and everyone said oh my god the rates will skyrocket... And not only did they not go up but kept going down... I take anything I read from a mortgage lender or bank with a huge block of salt... Not a grain... A whole block :)

The way I look at it is this. I got my lock at the best rate I could at the time. Could we have gotten a better one? Yeah, if we waited to buy our house a few months longer. And who knows if that house would have still been on the market at that time? Nobody knows. And hindsight is always 20/20 so there's no point in second guessing. Cuz if we had waited and kept on fishing, we could be still looking now and end up having a higher rate.

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Ever since last march when the fed got out of the mortgage rate control business and everyone said oh my god the rates will skyrocket...
The POMO purchases continue unabated.... http://www.newyorkfed.org/markets/tot_operation_schedule.html

OT- but what is bizarre about the way these fed treasury purchases occur is that they are massive private market-dwarfing open market transactions announced well in advance. I know a trader who has been making a killing front running these transactions.

One never knows where rates will go for sure, but this trend is certainly ugly. I hope it doesn't continue or the spring selling season could be a disaster (again).

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