30 Year Fixed Rate Mortgage Plumbs Fresh Record Lows As Mortgage Market Anticipates New QE

Tyler Durden's picture

The 30 year Freddie Fixed Rate Mortgage has just printed on the south side of 4.50%, at 4.49%: a fresh new all time record. The spread to the 10 year Bond (which, yes, is tighter once again, flirting as usual with the 2.9% barrier), is about 158 bps. Of course, should the Fed recommence QE, which is now just a matter of politically self-destructive time, the spread will collapse, the 10 Year will plunge, and the administration will bankrupt all mortgage lenders (who are idiotic enough not to have been subsumed by the bankrupt GSE Borg) who will soon be forced to lend a 30 year mortgage at something around 3%. Alas, by the time the administration realizes that it does not matter what rate the mortgage is, and that the security of having a 1) cash flow and 2) job is far more important, and still as missing as always, it will be too late.

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pan-the-ist's picture

Do I wait for QE before I refi or should I jump on these rates now?

Village Idiot's picture

In the business - refi now at historically rates, but, pay no points!  Your hard costs shouldn't exceed 3k (based on loan amount) and if the bottom falls out on rates, do it again.  3K is cheap insurance, and, you can start to save (recoup costs) in the meantime.  Unless this was a rhetorical question - in which case, never mind.

pan-the-ist's picture

It was not retorical.  How do I go about not paying any points?

mnevins2's picture

I'm a mortgage broker and work exclusively with "no cost" mortgages. Depending upon your loan size, you can increase your rate by 1/8th - 1/4 and have the higher payback to the lender absorb your closing costs.  Questions?

derekste's picture

refi'd my 30 year FHA that I've had for 18 months from 5.0 to 4.375... streamline refi, no points, broker is paying closing costs(all the ones he can legally pay), and I'm financing the up-front MIP.

How'd I do?

SteveNYC's picture

What, you mean there is NO DEMAND for credit??


But....but......Obama, Bush, Geithner, Summers, Bernanke et al. told me that they NEEDED to get credit FLOWING again!! That there was NOT ENOUGH credit being made available!

These guys wouldn't lie to me would they???

lizzy36's picture

When the "smartest men in the room" (the pencil dick and his fat ass side kick) incorrectly label a a solvency crisis a liquidity crisis , de facto, they are lying. 

SteveNYC's picture

The "side kick" should be force-fed Diet Coke a la the Brad Pitt movie "Seven", when the "glutton" gets his treatment.

Spigot's picture

There is demand but they do not qualify. The pool of qualified borrows shrunk to a puddle. But really, rates are relative to the 10 yr, and pretty much will follow it down to zero + conceirge charges.

hellboy's picture

David Rosenberg's newest:

What passes as normal? Well, today, that is an interesting question.

Just reading the newspapers from the past few days, does More Workers Face Pay Cuts, Not Furloughs (New York Times) get you all hot and heavy over a new cyclical bull market? How about Tech Gadgets Steal Sales From Appliances, Clothing (Wall Street Journal) — hey, who cares if the spin cycle on the washer-dryer don’t work no more, I got me an iPad! Amazing.

Meanwhile, there is excitement in the air over the view that all we have on our hands is a pause that refreshes. Interesting, however, as to how the bond market isn’t buying it, and why should it when MasterCard processed transactions are flat from where they were a year ago.

Nothing we are seeing in a post-bubble credit collapse is normal. 

-Michelle-'s picture

I saw that WSJ headline this morning and got a nice chuckle.  We're coming up on five years in this house.  In the past month, we've had to:

Renew our termite bond: $900
Major service on our A/C units: $600
Increase our attic insulation and put in attic fans: $3060
Replace our fridge (bought new for this house): $1300

No iPads here.  I have wondered if other people who bought around the same time we did are going through the same maintenance issues right now.  It seems like we've been getting some deals cut here and there.  When the pest control company called to up the bond, they offered a discount almost immediately.  The A/C people came out the same day I called and offered a discount.  The insulation estimate was done the same day, install was completed after only two days, and they knocked off the price on the fans and made sure to direct us toward info on filing for the federal tax credit.  Even the fridge got a 10% discount immediately offered when we told the floor rep that we wanted to purchase that day and with cash.

ZeroPower's picture

Nice work on paying cash - which i expect about 10% of the population do so (mostly seniors who 'hate' plastic).

Cash is typically great for making deals. Whether 'with a receipt' or not, paying in dollars always gives me some sort of give when i try and bargain with people. When i ran a contracting business a few years back, i never implicitly asked for cash in my deals but whenever it was offered (rather, suggested) i always happily agreed in exchange for a few points off the top.

As for wait times, i suppose demand is down (thanks to do-it-yourselfers i assume). On the other side of the border, we're very slightly seeing things here slowing down, but not enough to say the correction has reached us yet. The smart ones will be ready when it does. 

Sancho Ponzi's picture

OT: What's up with UNG?

No Mas's picture

"Alas, by the time the administration realizes that it does not matter what rate the mortgage is, and that the security of having a 1) cash flow and 2) job is far more important, and still as missing as always, it will be too late."

Too late for what or whom?  Are you talking of political fortunes here?

Is it feasible to believe we can have a material decline in any major index within the next 10 years?  5 years?  It would appear that with the market disconnected from any measure of the US economic performance (well documented by ZH), the only thing that could cause a major drop would be a decision by the Federal Reserve to make it happen?  Can anyone see a scenario where they would allow that result? 

ElvisDog's picture

Your premise assumes that the Fed is ominpotent and can always achieve its desired result. You have to remember that the Fed is not a government agency but a collection of privately-held banks. Look back in history to the George Soros - Bank of England confrontation. Bank of England would be equivalent to the Fed. By your argument, market forces could never overwhelm the mighty Bank of England. Don't fight the BoE. But that didn't work out so well, did it? The Fed's power is largely based on your attitude - that they will "print money" and "they won't cause the markets to drop". I don't believe they are omnipotent at all.

NoBull1994's picture

It is only a matter of time until the Gov't declares that all defaults - mortgages, credit cards, personal loans, etc. - that occurred between 2007 and 2010 are now null and void, and that credit bureaus and lenders are forbidden from docking the credit scores of borrowers who surely defaulted through no fault of their own.... 

Boilermaker's picture

LOL, I think you forgot the 'sweeping reform' to personal bankruptcy law in 2005 just prior to the shit hitting the fan.  They knew this shit storm was coming.  They aren't letting people off the hook, they are going to fucking enslave them.  Watch.

tmosley's picture

Same thing.

"Freedom is slavery"

MachoMan's picture

freedom doesn't have to be slavery, if one is disciplined enough...

SteveNYC's picture

The funny thing is, in 10 years the "prudent" that have no debt to "forgive" at the time of forgiveness, and the irresponsible who are indebted to their fuckin eyeballs, will be in the exact same positions.

MachoMan's picture

Don't worry, we'll be having the same conversation again with them soon enough...  somehow, even though we'll all be destitute, some of those fucking idiots will still figure out how to squander their reserves or ensure they will have none (what's the slave equivalent of an ipad?  a sugar cookie?  fuck, they still might be trying to get ipads...).

americanspirit's picture

Perhaps events will move past the point where they can 'allow' or 'disallow' anything, regardless of how much increasingly worthless paper they print. At some point mob mentality or panic may just prevail over calculations made in those cool glass offices above it all. Remember 'L'etat - c'est moi". That same laissez faire mentality has brought down empires before, and it will again this time.

Ragnarok's picture

'L'etat - c'est moi" is the opposite of "Laissez faire".

-Michelle-'s picture

I'm thinking more along the lines of "apres moi, le deluge."

jakeman's picture

Actually, I'm thinking they're telling us, "Vas te faire foutre." (Or whatever the plural of that phrase is...)


-Michelle-'s picture

The sentiment is about the same, I suppose.

hamurobby's picture

So how about this. I get a reasonable mortgage and sit on the cash and wait for a liquidity crisis. If said crisis does not come just pay back the loan, no problem. If it comes, buy gold on the cheap and then make my payments until we reach a tipping point to major inflation, liquidate ()% of gold then pay back loan. The other benefit to this is Im not sitting on a house that maybe a liability if I must retreat to my trailer in the woods one day (the house value is then liquid to me if its financed and I have to vacate). Besides the cost of origination and interest, any other pitfalls anyone sees in this scenario?

Of course we could all get lucky and gold would never go up in value, and I can keep my job and everything will be great, I can live with that (loss).

starfish's picture

You could get a 7/1 ARM at 3.25-3.5 with 0 closing costs...7 years should be enough for that scenario to play out.

WaterWings's picture

Of course we could all get lucky and gold would never go up in value, and I can keep my job and everything will be great, I can live with that (loss).

Exactly. Which is why most people I know think they can ignore the math and everything will be okay. They fight the very idea that there is a real decline in quality of life, that it is permanent, and that it will continue to deteriorate. As Michele added above: "Apres moi, le deluge." Everyone else will get screwed but not me, I got mine.

It's a tsunami. Previous paradigms no longer apply.

Teevee, junkfood-addled Amerika could not withstand a currency collapse. The Black Plague made human capital valuable again - in modern application we have tens of millions on the gov't teat with no recovery.


All those 99-weekers waiting for jobs. What jobs? Doing what? The service economy is a fiat lie and our infrastructure is based on a constant flow of cheap oil.

Mortgage? WTF for? Prices are artificially high because of 1) shadow inventory 2) who can say they will be employed in their profession to make payments for 30 years anymore - no man is an island.

Stay nimble. Stay quick. This is no time for white picket fences. Going back to the sad, miserable, drugged-up state of our Nation it ain't a stretch to imagine that the Mandarin speakers are planning to make use of their raw (war) materials and spouse-less young men for "real estate acquisition". Hasn't anyone read a history book around here? The Chi-Coms have openly spoken of how they deserve North America. This kind of scenario isn't discussed because it is the worst-case scenario outside of nuc-bio-chem warfare, and then subsequent invasion.

"Oh, but China needs us and we need them." Bullshit. Everyone is buying time. The Chinese aren't stupid and they know they aren't getting their money back. Some finance guy over there said US bonds are not safe medium and long. In other words "We are trying to buy as much time as possible to acquire tangible assets that matter!"

All the survivalists from the 70's were wrong because they didn't understand the "Nixon" trick/effect of taking us off the gold standard and taking paper money to its extreme utility. It would have been better to face this shitstorm back then. Back when Americans were still eating meals that had real nutrition, no obesity epidemic, actual human interaction, strong infrastructure with less bureaucracy. Today it's all bloated beyond recognition.

When the Fed finally makes a move that has a visible and real effect on Amerika even rationing of supplies won't keep the interurban areas content. We are at the brink of a f.u.n.d.a.m.e.n.t.a.l. shift. Be far away from the millions that require a weekly check for their very survival. Do you think the owners of the Fed care if millions starve?

1100-TACTICAL-12's picture

Could not have said it better.

hamurobby's picture

Thanks for the input, I know better, but sometimes you just have to hear it from someone else. I also got an ear full from my best friend this afternoon about this, so we are out of here. I have a few days of minor repairs to do to this house, and its on the market. I will get to shoot my hbars in the yard again, I miss that bad.

Boilermaker's picture

People don't buy fucking houses when the prices are falling, foreclosures are all over the place for all to see, and you either don't have a job or don't know if you'll have a job tomorrow.

How the fuck is that difficult to understand?  Interest rate...Jesus f'ing Christ, who gives a shit?

dan22's picture

The Terrifying Protest of China's Poor- The Kindergarten Massacres

Yesterday a man wielding a knife killed three children at a kindergarten in eastern China's Shandong province, the latest in a string of attacks that has shocked parents and has forced government leaders to focus on the underlying causes of the violence.  Police have detained a 26-year-old man, Fang Jiantang, who admitted to killing the children, state-run Xinhua news agency said Wednesday. Xinhua described the man as self-employed. There was no immediate word on what motivated his murderous rampage.

The three children died at the school, and three other children, along with four teachers, were taken to a hospital, Xinhua said. The attack occurred in Zibo, a manufacturing city with a population of more than four million. The assault took place Tuesday afternoon, but Xinhua didn't issue a report until a day later. 

The Terrifying Protest of China's Poor- The Kindergarten Massacres 

Village Idiot's picture

"RIP poor children."


RIP poor children, grandchildren, great grandchildren, great great grandchildren.  F&*k me!


EDIT: just saw the RIP, without any reference.  I am referring to our children - unfortunately.

joepast's picture

fannie and freddie to the rescue.. underwater property homeowners to get a huge "QE" gift from the bogus gov. via reducing loan amts on underwater mort .. is this so ???????? an august pre elections gift for dems ...

Rainman's picture

It's still a rumor, probably to test the outrage first. One in five are underwater to the tune of $ 800 billion now. That said, the Critters will be more dangerous than ever for the next 3 months.

ElvisDog's picture

Riddle me this: will the millions currently living in their homes and haven't paid their mortgages for many months suddenly go back to paying their mortgages if their interest rates are reduced or some fraction of their principal has been reduced? I think not.

Gimp's picture

I know we all need money but can ZH get rid of the "Profit with Cramer" pop-up ad with is ugly mug on it. I think the title is an oxymoron.

tmosley's picture

I think it's hilarious that Cramer is paying for a portion of this website.

Gimp's picture

RE market is still dead. I have been trying to sell a piece of property for the past 18 months in a great location, with limited supply, price is 60% below the price two years ago and still no offers. Place is spotless and well maintained. People ain't pulling the trigger.

badameli's picture

What location? Photos? and price?

ZeroPower's picture


If youre going to post an anecdote at least give us some info...

Kreditanstalt's picture

Do we have to pay this with REAL saved-up money or can we use that funny "credit" or "debt" kind?

solgundy's picture

Obama may be about to order Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) to forgive a portion of the mortgage debt of Americans who owe more than their homes are worth. The potential move is seen as a last-gasp effort to save the Obama agenda; the political calculation is that the number of grateful Americans would outnumber those offended that they would be paying for someone else’s mistakes.

Village Idiot's picture

count me as one of the offended.

spyware-free's picture

Me too. Fuck this social experiment called big government. Being responsible for one's self has become a fool's errand.

ElvisDog's picture

I have to agree. It would be a zero-sum-gain politically at best. And the outraged are probably more likely to vote in the coming elections.