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At 4.86%, The Fannie 30 Year Fixed Mortgage Is Back To 7 Month Highs
To all who have been following the recent rout in both the 10 year and the mortgage market, today's most recent jump in the 30 Year Freddie Fixed-rate mortgage, which at 4.86%just hit a 7 month high, will not come as a surprise. To Ben Bernanke, however, this is a flashing red sign, that QE2 is only working for Wall Street: its primary function of creating imaginary wealth in the form of additional home equity is not only failing, but the recent jump in mortgage rates by 1%, has had the indirect impact of forcing home prices to drop by another 10%. Look for this to hit Case Shiller data in March-April when today's near-5% mortgage rates diffuse through the marketplace. Robert Shiller describes it best: "Optimism is fading from the housing market." QE3 should promptly abort any last traces of anything even remotely resembling a housing recovery.
Some more from Bloomberg:
Rising home loan rates may limit homebuyer demand as housing remains a weak link for the economy. Home prices in October fell 0.8 percent from a year earlier, the largest year- over-year decline since December 2009, the S&P/Case-Shiller index of property values showed this week.
Sales of new and existing homes rose less than economists estimated in November even as mortgage rates sank to the lowest levels on record, reports from the Commerce Department and the National Association of Realtors showed last week.
Pending home sales climbed more than forecast in November, a sign demand is recovering following a post-tax credit plunge, according to a report from the Realtors group today. The data are based on contract signings, while existing-home sales represent closings.
The rate for a 30-year loan has climbed for six of the past seven weeks amid speculation that President Barack Obama’s agreement to a two-year tax cut extension will boost economic growth and inflation. The rise pushed the monthly cost of a $300,000 loan to $1,585 from $1,462.
The bolded text is all one needs to be aware of, and every incremental rise in rates, results in even more money out of pocket that makes the monthly payment that much higher. Of course all this assumes that someone is still paying their mortgage somewhere in this taxpayer subsidized country.
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With prices 30% overvalued per Case-Shiller, 1.9 years excess inventory and no qualifying borrowers what's not to like?
Excessive counterfeiting meets the "how much a month" crowd. The result is a totally screwed up mortgage market. Who could have guessed that?
As long as The Ben Bernank's masters are robbing the world blind all is good. There is no reason to change anything. For those living on Park Avenue and in Westchester life is good. Champagne and caviar all around. Everybody else can eat yellow snow. You might even find a nice treat from one of the neighborhood's local mutts.
For those who think theyre insulated from the hoi paloi in large hi rise buildings, todays breaking news from Greece-
Massive bomb blast resembling Okla City bombing
YouTube - Shattered windows, blasted cars as bomb explodes outside court in Greece.flv
Income and/or social inequality is one of the 4 pre-conditions for revolution.
Thanks SDO, wow, that was some motorcycle bomb. Things are really starting to roll, it's like being in the mountains and hearing the first low rumblings of an avalanch, it isn't be long before everything come crashing down.
I like those spiffy GOLD helmets -- think they're the real McCoy?
Once again, we look to the Russian media for honest coverage. This world is upside down and someone's concluded it's the only way to empty certain pockets. (dig your avatar Sophist - best TV theme music ever written)
all's good in aspen and vail.
Realtors see turnaround
In year-end summaries released this week, two real estate agents in Aspen-Snowmass wrote they believe the market is recovering.
Ski resort real estate rallies from '09
Not surprised that the rich ruling elite is able to buy up Aspen ski cottages with bailout cash from us unwashed underlings.
Listen to this tune and eeeeeverything will be just allright =)
http://www.youtube.com/watch?v=25wviijhpQk
Yahoo!Finance headline breathlessly exclaiming in ALL CAPS that the number of 'signed promises' to buy a house jumped 3% in Nov. Big deal...still got to close. That was Nov, now that loan payment just jumped higher on something the value is dropping in. Maybe to the tune of 30% more downside.
don't forget the effect of dollar destruction.. a 30% needed dip is most likely 20% now
forget about all those excess inventories out in shitvilles - real homes are where people live and those markets just dropped hard the last two months... another 20% and people will flood the good houses even if they are dead broke
Bingo. I'm trying to get rid of my above-water house now and take the equity while I still can... I'll pick up a house in a couple years from weak hands (probably a bank). Essentially, this is what happened to all of the homes in my area above ~$350k... the owners put them on the market en masse and, as a result, no one sold shit because they couldn't stand the haircut. They all sit... killing the retirement aspirations of their "owners". Luckily, my shitbird house is well below the "not going to move if god came in and started pushing" price.
It won't matter by the time the real numbers are reported. By then, there will be other manipulated figures to celebrate.
A $1.6tn deficit, collapsing munis, escalating input prices, collapsing margins... they DON'T MATTER. All that matters is that some made-up figure beats an expected made-up figure.
"All that matters is that some made-up figure beats an expected made-up figure."
LOL!
Exactly. You know what all those contracts say? "If I can sell my house for exorbitant price X, then I'll buy your house for Y." Good luck with that.
And IYR does it's daily plunge and miracle recover act and is green for the nth day in a row.
You know, allow the boys to sell their positions to the fed at the open then crank the bitch back up to suck in more retail.
I mean...that's what I think is happening albeit somewhat lacking ethics or a moral compass...
And then Bernanke said let there be POMO and it was done. And God saw that it was good
So at what point does someone with some moral fortitude put Bernanke in a headlock, bitchslap him repeatedly, and warn him that he'd better ice any plans for further QE, since one of his main, alleged objectives of this disastrous program, lower interest rates, is backfiring (while producing higher costs in commodities and other products)?
Will anyone take even a meager step of challenging the Bernank?
Truth,
This is the question, now isn't it. This is what needs to happen. B. Bernanke MUST be the first order of business for the new Congress. Will they attend to the duty? Do any of them, save for Ron Paul, even know anything about the Fed? Is there any capacity there to deal with the issue head on? Is there anyone there that cannot be bought?
Nothing less than the Republic hangs in the balance...and yet I hardly ever even hear anyone speak of the problem [except here of course].
Oh well, I guess. Shit sandwiches all around. Carry on.
Good grief.
The media, TV, TV news and Hollywood all pimp for Mugabe 2. No one will say an ill word about him. A nation of sheep and idiots.
Your comment presumes there is a difference between Congress and the FED. However, the two are joined at the hip at this juncture.
honor amongst thieves. It'll last till the shit hits the fan, then it'll get interesting.
Only one of the two has any remote chance to back track with some semblance of plausible deniability... and a get out of jail card from bush and/or obama isn't going to cut it.
It may be in January. I know everyone thinks Ron Paul is a schlub and all...but hear me out- Just ONE little bump in the road for this massive Rube Goldberg contraption hurtling down the hiway and its all over. This all depends on total secrecy behind a media iron curtain and if just a bit of it starts getting exposed too much (maybe in the form of Pauls demands for FED audit and oversight) theyve got absolutely nothing and all the printed fake money doesnt matter, FED and bank R/E balance sheets get cut in half. It wouldnt take MUCH!
So will someone like Scott Pelley, who conducted the '60 Minutes' interview of The Bernank (twice now), actually conduct a third interview, where he actually does a modicum of homework, and is prepared to ask things other than softball lobs with absolutely no follow up questions or challenges, of the Bernank, when (not if) the Bernank contradicts himself or outright lies?
Or am I expecting way too much of the Main Stream Media?
I am asking way too much.
Aren't I?
Even one competent question, such as: "Mr. Bernanke, why are interest rates rising, though you are spending hundreds of billions with the alleged goal of keep interest rates subdued?"
What about: "What is the value of the asset-backed paper you purchased from financial institutions and banks, and will you disclose the value to the American People?"
Or how about: "Mr. Bernanke, you claim that deflation is still the primary risk to the American Economy. But what would you tell the hundreds of millions of Americans who are experiencing rising prices at the gas pump, in their grocery stores, when paying their home heating costs, and in paying tuition and medical bills?"
If these are too difficult, may I suggest: "Mr. Bernanke, why would the Federal Reserve purchase Treasury Notes from private Banks and Financial institutions, and pay them a commission on these purchases, when they could buy these same Treasury Notes from the Treasury Department directly, without incurring any commission costs?"
I am indeed expecting way too much. These fairly basic questions are too much to ask for.
Curious, isn't it? Simple questions. Answers that are...obvious. And yet no one asks the questions.
It makes a fellow think...about the changing nature of his country...when things this obvious are ignored. It makes him have to think that there is a reason no one is putting any of this together.
But enough about that...when is the white Iphone coming out...anyone? I'm on a mission to find one...to be the first...and I have a strange penchant for flesh...
MORE SHOPPING STORIES!
we need an Ed Bradley R.I.P.
Or a new and improved Woodward & Bernstein, who focus on the epic monetary fraud being perpetrated under the world's nose.
Now, if Brian Sack is an honest man, he will lower the QE-Lite portion of next month's purchases commensurate with the decrease in actual and expected MBS principal payments (refis are edging down).
Another $105 billion, and G.W. passes out.
Per the headline at CNBS website as I write this.....
"Pending Home Sales Jump More Than Expected"
I'm not making this shit up.
No, you definately are not.
Bob Pissonme did a bit yesterday where he stumbled through a 'new school of thought' where new highs made on record low volume were actually bullish. That's different from the 'old school of thought'....
You know...dupe the ignorant at all costs.
<EDIT> here is the link...keep a puke bucket handy...http://www.cnbc.com/id/40841431
BOB PISSONME
LOL that is his new name from now on
And of course lower in the article it states that 2010 is still shaping up as the worst year for house sales in 13 years. Just imagine if the headline read:
"Housing Depression Continues With Lowest Numbers Since 1997"
You would hate to make the sheep panic. And out east the Yankees still think all of their palaces are worth 2006 prices. The denial here is still so thick you could cut it with a chainsaw.
How many people actually read the full article and digest it? Headlines are everything.
Funny how the rear-view mirror pending home sales are always up, then the real news comes out actual sales plunge huge.
The average working drone only reads the first newsflash and thinks all is well. After that he decides to max out high credit cards even more on that 4th 47 inch LCD screen.
Check out this bombing in Greece everyone, this is massive!
No reporting from our WonderLand media of course, as total media iron curtain must contain the sheeple in their all-is-well consumer credit bliss. But its coming here next, make no mistake.
YouTube - Shattered windows, blasted cars as bomb explodes outside court in Greece.flv
Thats from a bomb on a motorcycle?
Already taken down based on 'copyright grounds' - yeah, right - I got your freedom of press right here...
Boiler,
Of course, I caught that, too. I think Bob is on medication, something that numbs the conscience, because he finds a way, every single day, to be ecstatic about something...something that is clearly stupid and quite certainly bad.
As I have said many times now, we are also witnessing the implosion of an entire network. Personally, I cannot take my eyes off it...morbid curiosity...watching a slow motion train wreck. Whack-a-Mole wit Comcast when that deal is done to be sure.
But the Pisani effect....unbelievable pretzel logic.
Who still watches CNBC and why? I used to watch Squawk Box in the morning before work. I would go to work all pissed off, listening to Birdface Becky and Carl the Cockroach Quintanilla. I finally got smart and turned that shit off. I have never had any desire to turn it back on. Becky can blow Buffett. Keenan can act like an arrogant douche. Carl can kiss all the asses they want. I won't be watching that mind numbing bullshit ever again. And Cramer is even worse than that triumvirate of triviality.
CNBS makes me hurls, havent turned it on in about a year. Theyre definitely in their last days.
I'm off on Christmas break (auto industry shut down) and I flip back and forth. You have to take it for entertainment like it's the WWF. I do find it somewhat comical to watch then constantly contort bad news into good. Santelli is OK, so is Olick (sp?), and Schiff is on sometimes. Just take the other garbage as a broadway show.
Schiff clip from CNBC yesterday was a burner, he clowned that big turd, Erins partner whats-his-name.
Schiff's editorial in today's WSJ is really spot on
"Home Prices Are Still Too High"
Time to short IYR...oh, just got stopped out again. Ooops. New highs. Sorry, play again later <Pac Man killed sound>.
Haines, boxers or briefs?
G-string panties.
WVI,
I already answered your question. Additionally, I am keeping track of the state of propaganda in America. This is its headquarters.
Furthermore, there is going to be a great short in it.
As for your feelings about the personalities that continue to inhabit the network despite the fact that they quit doing their jobs about five years ago, agreed.
It will be quite interesting to see what Comcast does with the channel. How many will they keep, fire, promote, etc.
If they want to regain credibiliy they must clean house. I don't think that's in the cards. To extend and pretend the ponzi, they must keep all the well trained liars they now have. If anything, I could see them getting rid of the very few good ones they have.
I hope ZH beats the shit out of every stupid move they make as well. Screw CNBC, they are worse than regular TV (if that is at all possible).
END THE MORTGAGE INTEREST DEDUCTION
Well, consider that the top 5% of earners do 37% of the consumer spending. That's a pretty good outcome for Ben's market 'wealth effect' thesis. Out here in the Silicon Valley you'd never know there was a recession. Restaurants and malls are jammed, real estate is doing well--in fact killing in SF South of Market. GOOG and NFLX millionaires are snapping up BMWs at record pace. It may all be BS, but Ben has engineered an economic uptick without the little guy. It can't last, but he's in too deep at this point, isn't he?
DOW down -30 WTF so its armageddon or something?
Bernanke is unfazed as his banking-interest employers have him convinced that the average American has at least a million in equity exposure.
I thought rates were low a few yrs ago when i sold at 5.5%! .. but a
4% Mortgage soon to be 5% is of little use if noone can qualify.
The RIR real interest rate is around 15%, allowing for 10% price decline per Yr.
where does virgil sign up for this great deal?
dont forget to add in the local government theft of rising property taxes !
I think its all BS, how can people come up with a FICO score for a 30 with all the bankruptcies and previous foreclosures? I think its all BS and they make up whatever they want.
Query:
Under what scenario will more homes, new and existing, be sold?:
A) Mortgage rates are 4% on a 30 year fixed rate, but unemployment is 9.8% officially, and 17% to 21% by more realistic though unofficial metrics, and real wages are declining as inflation is rising; or
B) Mortgage rates are 7.4% on a 30 year fixed rate, but unemployment is 5.2% officially, and no higher than an honest 7.5% by more realistic though unofficial metrics, and real wages are rising as inflation is in held in true check.
Wait, we already know the answer, with confidence.
With a new wave of existing homes being gutted of their wiring due to copper shooting up again, banks will have to put a lot into their repo's on balance sheets to ever sell their years worth of existing inventory.
Also what kind of maniac would buy a new home today when any fool can see Case Schillers own 30% overvalued estimate?
Someone who listens to the head of the National Realtors Association, who gets a prime spot to say whatever he wants on CNBsC, unchallenged, because CNBsC is really an infomercial for all sorts of snake oil peddlers, dressed up in drag as a 'financial news media outlet.'
The banks don't give a damn as they will end up with both the bailout and the property. The top dogs are in bed with Congress so they continue to get enriched in the process.
Take into consideration that Fannie/Freddie own over 60% of household mortgages and it's fairly easy to determine that your right for property ownership is in grave danger.
Also what kind of maniac would buy a new home today when any fool can see Case Schillers own 30% overvalued estimate?
Someone who expects high inflation to pay the principal on his mortgage?
"Optimism is fading from the housing market."
only Polyannas, shills (realtors, NAR, etc) and morons have been optimistic on housing and these people aren't going to change their tune
those of us who prefer living in the real world understand that housing has a long way to go before any kind of bottom is reached
They should come up here to Canada, there's been some months of declining sales, but still lots of young, stupid couples willing to drink the RE Kool Aid.
Vancouver market is insane, Still! Was fortunate to get my wife to sell her house before she went underwater: she'd bought at about the peak (before we'd met). In miracles of miracles, she managed to actually walk away with a few coins (not much, but better than the other way round).
I suspect that the reason it's still being held up is because a lot of the houses are multi-residence, meaning that there are often several incomes coming in, many as rental income. Problem is, with high mortgages folks are really on the edge, and the loss of one income, and we all know that jobs are ticking down all over the place, is all it would take to turn everything on its head. As China's growth is reeled in it's going to impact British Columbia, it'll result in a lot of the kids of rich Chinese to be called home- poof! there goes the rental market!
As noted above, I saw this game shaping up and managed to get my wife (before we married) to bail out: thank the heavens that she's bright, and was able to comprehend all this.
Know when to hold 'em, know when to fold 'em...
Schiff's editorial in today's WSJ is really spot on
"Home Prices Are Still Too High"
http://online.wsj.com/article/SB10001424052702304173704575578190261574342.html?mod=WSJ_Opinion_LEFTTopOpinion
Bernanke's and his buddies at ECB and PBoC are preparing the next "unorthodox" weapon to keep their insolvent asses afloat. I see a new tool that neuters the forex market and limits the effects of speculation on bond prices. The trifecta will be complete, all you markets are belong to us!
Obama and Congress will hail it as a miracle of financial engineering.
Good comments here. I still think that outside of government workers and bankers-Wall Street we are in a deflationary wage spiral. I have lots of friends in their 50's who are hoping they can find work at only maybe a 33% pay cut from what they were making...and taking a long time to find those jobs if they get them. I've taken my second pay cut in two years to stay employed and commission sales people are generally down across the board in a flat or sinking economy. So, you could have a zero percent mortgage rate and it will not significantly help, unemployed, underemployed and employed but scared about being unemployed and underemployed people buy homes. Add to that expectations that house prices may fall further and even the employed are not keen on buying. The Barry-Bernanke axis cannot fix those things with current policy. In fact, they make things worse.
This means that 30 year mortgage demand must be rising! After all, in classic supply and demand situations, price goes up as demand increases, therefore....oh, never mind...
I don't fault the Greeks, and I am a bit surprised it isn't happening elsewhere. the banks make poor loan decisions as they do time and time again and the people suffer to bail them out from their own poor investments. it is economic warfare. there is no democracy involved. plus they keep paying insane bonus money and all the profits they make are once more because the people are paying for it.
Alot of the banking profits in 2010 came in from people refinancing at the 4% or lower free money rates. This section of the market will dry up and as you look further down the road there will be no business unless rates go to 3.5%. It is another frontloaded refi for clunkers and squatters program that has changed the mentality of the homeowner and it will cause serious pain for the housing market moving forward.... Money for nothing and your chicks for free. Don't be surprised if you see offers to refi at a higher rate up to 110% of LTV? This will be the only carrot they will have left to force the sheep into borrowing more so they will spend and keep the American dream alive.
What I wonder is how upside down all those folks who rushed in to buy a house to get the $8k credit whose houses promptly fell in value--and will continue to do so next year.
I believe they had to be 'First Time Homebuyers" to qualify for the credit.
I'm not upside down, but I'll probably be giving them the money back in anticipation of a decrease in home price greater than $8k before the time to keep the house has run. First to blink wins (about the last to blink by now though).
The $8k pretty much just kept a bid on the ~$0-115k housing market... $8k is a pretty big chunk... once these people start bailing too, there will literally not be a floor to the market.
I'm still trying to refi my 99 Mercury Marquis @ 30yr/5% and still fighting the IRS to allow my Marquis interest deduction on my 1040-Sch A since, after all, my Marquis has become my primary residence.
Wish me luck.
See what happens when you bash CNBC. You get a picture of Cramer on the ZH home page.
"The rise pushed the monthly cost of a $300,000 loan to $1,585 from $1,462" at 4.86% with 20% down excluding PPI. Just like the 1st time tax credit, the pool of perfect credit is waning.
However, as the rate increases, it should cause banks to relax the qualification requirements.
After all, the real function of interest rates, according to Adam Smith, is as a barometer of profit potential.
Most loans, despite appearances, are made on the expectation of profit sufficient to exceed the interest payment not to bail-out and make whole as is currently in vogue.
This is why QE2 is failing. Holding down interest rates is detrimental to risk for without risk there is no return and without return there is no investment. The .25% overnight lending rate should suffice as prior to QE it was always the most effective tool in moderating the economy and it is totally lost in the conversation as no one has any idea how to get out of or away from QE.
Sadly, also lost in conversation is a discussion over the events of 1932. The market actually hit bottom on July 7 of 1932 -3 years after the crash of 1929.