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30 Year Freddie Mortgage Surges By 22 Bps Over Last Week, Highest Since August At 4.39%
After posting an all time low rate of 4.17% in the week ended November 11, the 30 Year Freddie Mac Fixed-Rate Mortgage has surged by 22 bps to 4.39%, the highest average rate since August 19, before QE2 had started to be priced in. This is a direct reaction to the recent drubbing in the 10 Year bond which continues to see an unwind of the QE2 frontrunning trade. Which brings the Fed to the key dilemma: does it focus once again on reducing interest rates, as a continuing widening in mortgages will make home purchases increasingly more problematic, foreclosure crisis aside, or does it persist in sponsoring the imaginary "wealth effect" by pushing stocks ever higher. It seems the inflection point where investors would buy both bonds and stocks with the same fervor has passed, and the time for Bernanke to choose one of the two has come. Of course, a simple resolution would be to start leaking QE3. And with the municipal collapse continuing today, the Fed's choice may soon be moot.
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http://www.ny.frb.org/research/staff_reports/sr441.html <--- I suggest you read this [basically it is rationalization which will be used for all future QE's].
Thanks.
Unfortunately, my virus scanner stops me from connecting to a Federal Reserve site. It claims the website is a known fraud.
you might want to check if the virus scanner is made by the chinese...mine works fine -:)
I seriously can't make out if your reply is sarcastic or not ;-)
So your Chinese virus scanner doesn't recognize the Fed as a phishing attempt?
It's sarcasm. Try to keep up.
Wildly hillarious! Lets see...lowest rates ever caused no more homes to be sold, still about 20 years of 'inventory' not being touched at any price...hmmmm...HEY I got it! Lets RAISE rates and see what happens!
This is all just a circus freakshow from here on out.
Are you suggesting the FRB intended for the rates to go up? I sort of think this will be used to justify "adjusting" the pace and overall amount of purchases.
$600bn my arse. That'll be for the first 4 months alone.
Sure whatever, Ive been saying for a long time let the FED buy it all.
The Fed will support stocks. Mortgages are screwed no matter what the Fed does, including for the MERS mess, since nobody has a legal clear title. (That can't be fixed through Fed policy -- it detonates as soon as people can no longer hold their breath.)
All hail the impending Muni Mess, followed by Pension detonation.
I would suggest that the Fed will support whatever best serves the interests of the Fed and its owners.
+1, touché
Pretty sure it was Tyler who pointed out that if it comes down to stocks or bonds, they will save the bond market, because w/o the bond market, there is no market.
QE3!
Picking up one day after the events of QE2, the horribly deformed serial killer (Ben Bernanke) has survived his attack at the hands of (Ron) Paul and Ginny (Mae) and has migrated to a store where he steals new clothes; he then murders the store (small business) owners, Harold with a meat cleaver and Edna with a knitting needle, before moving on to a nearby lake front (foreclosure) property named Higgins Haven....
Looks like they saved up all the proceeds from this week's POMOs for today's special celebration for GM IPO.
nov 15 7-9bn
nov 16 4-6bn
nov 17 7-9bn
nov 18 6-8bn
Wow, they making GM look like its the next Google in the making. Let's hope mutual funds are not plowing into this thing for the retail folks.
Yeah tough choice. Its like choosing which way to die . Hanging or gas?
Mortgage rates are still near historic lows. If people weren't buying houses at those levels, they just aren't going to buy. Remember, we came out of a distorted market of people buying and selling homes as quick "investment returns".
So we've removed all the speculators and are returning to a more "normal" market, albeit one that needs to find its stabilization point. If people need homes, they'll buy them with mortgage rates at 8%. No big demand right now.
AH yes I see...its a pre-emptive rate hike in anticipation of great demand returning at some future point when Bernankes 'stock pump wealth effect' kicks in. Crackhead'o'nomics.
lower prices at 8%, for sure
people are payment oriented...simple as that
Sure I'd do the 8% on some house as long as the price drops in half. Whatever.
"whatever" means what, exactly, in your post?
Well, it means that the interest rate means nothing unless you take price into account, and real estate is still a big bubble. And the original post I was replying to asserted 'all the speculators have been removed' is laughable.
right. For some reason, I thought you were giving me hell about what I said. RE prices must/have to come down if rates go up. The prices in RE is already too high now so the decline SHOULD be much steeper once rates start to rise in earnest.
People were buying houses in the late 80's early 90's with mortgage rates in the teens. It didn't stop those who wanted/needed a house from buying one. Mortgage rates have little correlation to buying a home. If demand warrants it, the mortgage rate is moot.
Prices are nowhere near the 80'es level today, which means repayment+interest in real terms might not have been wholly different to the level today.
Demand + ability to buy and I will agree with you.
Agreed.
Early '80s...interest rates were high, but I was looking at a nice 3 bedroom house in Huntington Beach for about $150K. I'm sure somebody paid $1M for it in 2005-2007.
is this like your argument yesterday that the price of petroleum will have little affect? Once again, why stop with houses? Why would interest rates affect the buyer at all? Like you just agreed demand + the ABILITY to pay.
Agreed. All else being equal, there is a nifty inverse correlation between housing prices and interest rates. Of course, in the next two years, we will see housing drop and interest rates remain low, which will represent a nice buying opportunity for those who can afford it.
Harry, people also had things called JOBS then. It is kind of hard to buy a house without one.
Just like schoolsout said, people are payment oriented. You are flat out wrong that mortgage rates have nothing to do with buying. Price/rate are inversely correlated. High prices + high rates = DEAD housing market. I've been a real estate broker since the mid 1970s and have seen several broad cycles.
We agree.
We still agree.
Still in agreement.
Absolutely not. The speculators cannot de-leverage from their positions. So, nothing happened (they can't even refinance), or jingle mail merely made the banks the new speculators. We have *more* speculators now than ever -- upside down homeowners are speculators that want to deleverage the moment they get a chance (but they can't, because they are upside down.)
Kind of agree. Home owners are *never* price sensitive, and are *only* payment sensitive. With rates to 8%, prices would crash, because homeowners are payment sensitive.
Finally, no, people will *not* buy homes "because they need them". They will buy homes if they can afford them. Liar and NINJA loans will go away, the MBS market is dead for the rest of your lifetime, and these transactions will not occur because people cannot afford homes. (Home prices must still come down another 30%-40%.)
Agreed, but because homes do not deliver value for the price, and buyers cannot afford them (e.g., quite literally the buyers do not exist.)
agreed!
The speculators cannot de-leverage from their positions. So, nothing happened (they can't even refinance)
You forgot to add that those who should be able to refinance also are having an extremely difficult time because the banks are so insolvent they need the higher interest payments and are giving homeowners endless runaround on their paperwork. Someone on this site just the other day was telling us that his stack of papers is now 6" thick and the bank still keeps saying "Just one more form" with the process being months long now.
They will buy homes if they can afford them.
And we're not just talking monthly payment to the lender here. This fiasco has opened many peoples' eyes to the true cost of owning a home including maintanence, property taxes, etc.
So let me get this straight....you are bullish on the economy and bearish on housing? Excuse me for asking - but housing fueled the last bubble - what happens if the fed fails to re-inflate this bubble and municipalities bleed to death on lower land taxes? This is not positive for future corporate earnings.
The FED should just stop this.
Everything the FED "regulates" seems to go higher...unemployment/inflation/debt/etc. If the FED was in the business of regulating hot women there would be a hot women on every corner waiting to blow me.
But theres no reason for the FED to stop it. Theyre having fun, no one will stop them, and the american people still play their game although its Russian Roulette with 6 loaded chambers.
Oh, I think there is a very good reason for the FED to stop this nonsense....Average Joe is awake, pissed off, and voting.
FED credibility is as low as I have ever seen it, and pressure is coming to a Ben Bernanke near you...soon.
What makes you think they care what the average Joe thinks of them?
I certainly do hope youre correct, but as Obama in a speech just yesterday said 'We cant even make any comments about the FED, thats a private group'...so theyre insulated in a bubble. What do they care what the voters think? Anyone the voters put in is a FED protector.
Agreed...in the sense that that lame letter from the Rs to Bernanke was very disappointing. However, that election was without historic...and so I am presuming pressure this way will continue.
Investigations coming from out of the house next year, too.
Inflation angrily noted by the folk.
I just don't think old Ben can do whatever he likes...but agreed, more needs to happen.
Duplicate post.
Mortgage? We dont need no stinking mortgage.. POMO
What just gave silver and gold the robo boner?
If rates were at record lows and people did not buy then,what will happen when rates go to record highs?
According to a "gov't funded survey" the higher the interest rate, the stronger the ecnomy becomes... For every $1 spent in stimulus, $2 in activity is created. Therefore everyone becomes wealthy when rates increase to 30%. The brain power!
Reversal day and gm closes at 32! Only the Govment would bring a car company public during a depression.
I pray to see it! If they cant close on a positive note today, with all their saved up POMO ammo and all, theyre in deep trouble.
Gubmint Motors, lol no ones touching that crap with a stick.
Since we've been down recently, I can only think that your "reversal day" must mean we are going higher in the next few sessions.
Farmland in Northern Wisconsin is going for $2,000 - $3,000 per acre.
Its great up north the people, fresh air ...
Well the deal between Lennar and the fdic back around the first of the year would give you a pretty good idea of hard value. About $.40 on the dollar.
http://www.marketwatch.com/story/lennar-scoops-up-distressed-loans-from-...
This is true. Same thing with CRE ~
GM up 7%........for how long who knows?
YM
http://99ercharts.blogspot.com/2010/11/ym_18.html
http://www.zerohedge.com/forum/99er-charts
seems to me that the big MBS pigs are saying to the Fed: it buys more MBSs or the market gets the hose again
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