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Fed Unintended Consequence #267435: Homeowners Front-Running QE By Not Refinancing

Tyler Durden's picture





 

For the fifth week in a row, MBA mortgage applications fell - dragged lower by a notably consistent drop in the refinance index - which dropped 3% this week alone and represents almost 80% of the total number of loans. Surely if rates are rising - as they have in general in the last few weeks - we would expect the 'rational homeowner of olde' to rush to his friendly local mortgage broker and refinance immediately for fear of missing the turn and the 'opportunity of a lifetime' to lock-in low rates.

Unfortunately, just as retail equity investors appear to the be the smartest players in the room as they sell into strength, so the homeowner has now become conditioned by the Fed's central-planning and repression to expect rates to remain low - and QE3 to be implemented later in the year - and therefore will wait for the 'expected' lower rates rather than accept a periodically rising rate. Yet another unintended consequence that hints at the fact that should we see 'real' recovery (we know, but go with the thought experiment) then higher rates will act as a drag on a burgeoning mini-stimulus from refinancing and normalize us back to lower growth.

 

 


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Thu, 09/06/2012 - 10:30 | Link to Comment Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

the Bernank is a psychopath

Thu, 09/06/2012 - 10:40 | Link to Comment dlmaniac
dlmaniac's picture

I front-run FED by spending my would-be-mortgage-payment on gold and silver.

Thu, 09/06/2012 - 10:59 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

The market is clearly nervous. Any news in relation to Europe, China and U.S. obviously causes a rapid reaction of small investors and consumers. In recent months we have seen a lot of short-term movements and these continue.

Fri, 09/07/2012 - 00:06 | Link to Comment JohnKozac
JohnKozac's picture

Gold up 230% while houses down 30%.

So how much lower will houses be at the point when gold has jumped jumped another 200% ?

Will houses sink another 30% ?

40% ?

50% ?

Thu, 09/06/2012 - 10:43 | Link to Comment Comay Mierda
Comay Mierda's picture

refinance now

dont buy though

interest rates will spike when petrodollar reserve currency status ends

i dont care what they say about zirp. the dollar is dead and spiking interest rates will be necessary to put a floor on the collapse of the dollar

the whole world knows that the fed/primary dealers have been financing 100% of govt deficits since 2008.  pure funny money

also interesting to note that credit created for the federal govt is 73% of ALL credit creation in the last 5 years (see fed reserve z1 report)

obama cant wait to scapegoat "capitalism" when the dollar collapses. and they will say no one saw it coming

buy gold bitchez. it is the only asset class that has outpaced the % increase in total credit outstanding (FRN creation) since 1971

Thu, 09/06/2012 - 11:41 | Link to Comment Henry Chinaski
Henry Chinaski's picture

A refi makes the most sense if you plan to remain in debt. 

A while back, I looked at refinancing a 30yr mtg (27 remaining) @4.75% with a $325k balance at a new interest rate of $3.375%. Instead of paying the banksters $7k closing costs up front for the priveledge of increasing the debt and extending the term back out to 30 years, I lowered the interest expense, shortened the term and lowered the debt by paying down about 1/4 of the principal.  Your mileage may vary.

Thu, 09/06/2012 - 11:44 | Link to Comment Comay Mierda
Comay Mierda's picture

good call. i was thinking just in terms of interest rates. but yes, the closing fees can make a refi not worth it

Thu, 09/06/2012 - 12:39 | Link to Comment Henry Chinaski
Henry Chinaski's picture

Every situation is different.  After running the numbers on my alternatives the answer was obvious.  The important thing is to consider the alternative of paying down principal if that might be an option for you.  It is easy to fall into the either/or (refi/do nothing) trap, and not look at other alternatives.   

Probably the most important factor in a refinance decision is the length of time you plan to carry the debt.  If you plan to move/buy/sell in a few years or less, there won't be much benefit to monkeying with the mortgage.

Thu, 09/06/2012 - 11:53 | Link to Comment deez nutz
deez nutz's picture

A refi makes the most sense if you plan to remain in debt.

I would have offered more interest to any banker giving me the most equity for the re-fi.   Then I would have bought gold.   In 5 years you walk into the same bank and hand the teller 1 bullion bar you bought with your equity and pay that mortgage off.  Fiat does have some advantages.

Thu, 09/06/2012 - 12:00 | Link to Comment I am more equal...
I am more equal than others's picture

print bitchez, inflate all physical assets!!! Bring it.  NOT

 

No, physical assets won't inflate with hyperinflation.  Infact, they do quite the opposite.  Wiemar shows us real estate values dropped 80% in some cases.  Choosing between eating and buying - pay for real estate - most will opt for eating.  What fool would sell real estate knowing the nominal value can be paid back in inflated dollars.  No.  Real estate will suck when hyperinflation takes hold and when interest rates are increased to combat inflation you'll see a -7% change in value for every 100 basis point change in interest rates.  Buy gold/silver. 

Thu, 09/06/2012 - 14:02 | Link to Comment Comay Mierda
Comay Mierda's picture

exactly!  its a myth that residential real estate does well in hyperinflation.  when ppl are starving they wont pay their mortgage.  plus banks wont lend until interest rates skyrocketing and currency turmoil comes back under control or the currency gets revalued.

if you buy gold/silver now, wait til the end of the hyperinflationary crisis, you will be able to buy INCREDIBLE real estate deals.  truly once in a lifetime deals.  but the USA will become the USSA so there will be much more political risk you will have to deal with.  

Fri, 09/07/2012 - 00:10 | Link to Comment JohnKozac
JohnKozac's picture

<< Every situation is different>>

Yu are correct. My buddy looked at re-fi of his $780,000 mortgage on his house (now valued at $420,00).

The bank said fine but you need t0 put up $400,000 toward the refi of that $780k.

Since he is thinking of "just walking away" at this point....he told them "no thanks."

Thu, 09/06/2012 - 13:55 | Link to Comment LongBalls
LongBalls's picture

All you have to do is watch what is going on in Europe to understand what will happen in the U.S. The Fed will cap interest rates at 1% untill the new system is settled on. When we get there....i will refi. Thats if gold will not pay off my house or afford me some land elsewhere.

Thu, 09/06/2012 - 10:29 | Link to Comment LawsofPhysics
LawsofPhysics's picture

print bitchez, inflate all physical assets!!!  Bring it.

Thu, 09/06/2012 - 10:33 | Link to Comment bdc63
bdc63's picture

I don't see how the FED could possibly launch QE3 with WTI crude nearing $100 again, and the stock market approaching all time highs ...

Thu, 09/06/2012 - 10:38 | Link to Comment eclectic syncretist
eclectic syncretist's picture

The stock market is up on the fumes of inflation my friend.

Super Mario said he will push inflation until the euro is worthless unless someone stops him. 

Thu, 09/06/2012 - 10:52 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

There is a large "war margin" built into oil, and demand for gasoline continues to drop worldwide.

The stock market must move up @ 8% per annum or the pensions go ka-boom. 

That being said it is the ECB's turn to print, IMHO.  The FED will follow on after November.  If for no other reason than the "fiscal cliff" will have to be offset.

Thu, 09/06/2012 - 10:44 | Link to Comment AurorusBorealus
AurorusBorealus's picture

In the U.S., it is always about the crude, and you are right.  How can the Fed continue to ease monetary policy in the face of rising oil prices and warmongers rattling sabers for a full-on conflict in the Middle East?  The short answer is... they cannot short of another Lehman moment, which, given the massive black holes of debt sucking so much liquidity out of the system, is just around the corner.

Thu, 09/06/2012 - 10:51 | Link to Comment adr
adr's picture

Gas going above $4 means Obama is toast and you can froget about the holiday shopping season. Good luck selling the iPhone5 when nobody will pay to drive to wait in line.

Thu, 09/06/2012 - 10:58 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

I initially thought that gasoline over $4 meant the end of Obama.  But the Republicrats candidate is so unappetizing I think the number is now $5.  So Romney has got to get the Israelis to rattle their sabres a little louder.

Thu, 09/06/2012 - 11:04 | Link to Comment kito
kito's picture

its a good thing you are a bicycle repairman, that skill will be quite valuable should israel strike iran................

Thu, 09/06/2012 - 11:18 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

I have no intention of moving my shop to the middle east.  I could be wrong, but a strike by Israel at this time would be suicide for the entire middle east, IMHO.  So it ain't happening.  Sabre rattling, on the other hand, has it's uses.

Thu, 09/06/2012 - 11:31 | Link to Comment Nevermore Peabody
Nevermore Peabody's picture

Sabre rattling, on the other hand, has it's uses.

 

Is that where Bernank and Drahgi stole this from? Israel's playbook?

Thu, 09/06/2012 - 14:42 | Link to Comment icanhasbailout
icanhasbailout's picture

Food and fuel are specifically excluded from the computation of the official inflation rate.

 

Thus, the wise central planner manipulates in such a way as to push as much of the impact of inflationary printing into those two categories, where they can deny it exists. Brilliant!

Thu, 09/06/2012 - 10:34 | Link to Comment koaj
koaj's picture

ive refi'd twice in the past year. knocked 20% off my original minimum mortgage payment started in november 09

 

i figure ill wait for europe to implode before i do it again

Thu, 09/06/2012 - 10:40 | Link to Comment serog
serog's picture

Was that free?

Thu, 09/06/2012 - 17:13 | Link to Comment koaj
koaj's picture

When you continue making your normal monthly payments even when you get the refi month "off" you pay down a ton more principal. over the life of the loan, the smaller amount of interest accrued will greatly outweigh the minimal fees i paid (less than $500). also overpaying each month will knock the mortgage out in much less time. instead of paying interest, i pay principal

 

plus with the extra cash each month, i buy a little silver. works out in the end

Thu, 09/06/2012 - 10:48 | Link to Comment adr
adr's picture

and you've lost every dime you paid so far to your mortgage over the past three years. You might save 20k in interest over the lifetime of a loan when you refi from 5% to 4.25%, but two years of $1,000 mortgage payments is $19k down the drain after the refi, since you only paid about $5k of actual principal.

Not to mention the $4k average in closing fees. So your finance skills have actually put you in the hole over the long run. The bank must love you.

Unless lowering your monthly payment without caring about total cost is your only goal, following your path is just about the stupidest thing a person with a mortgage can do.

Kind of like a person that takes the 96 month 8% interest loan on a car because the monthly payment is lower than the 36 month 0% loan.

Thu, 09/06/2012 - 10:59 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I kept the term (25 years left on a 30 year mortgage at 6%) the same on my refi (25 year term to 4%) save 10% on my monthly loan payment.  When addind the ammortization on the original loan and the refi loan, I found that total payments (including the closing fees) was some $70K less on the refi over the original.  As long as term isn't added, a nice savings can be had both immediately and over the term of the loan.

Of course, the payment is still going down the toilet as 26% of the value of my home has gone to shit.

Thu, 09/06/2012 - 11:07 | Link to Comment serog
serog's picture

You sound like you know what you're doing and I'm sure you know this but i'll say it anyway.  Banks aren't looking out for you.  Ever.  If it sounds too good to be true...

Thu, 09/06/2012 - 11:18 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

What the bank gained through me signing a new note was me also signing a document that allowed them to rehypothicate my note over and over again. 

Also, the funny thing is that the "savings" alloted to me through this refi have already been eroding as property taxes are somehow raising, along with my homeowner's insurance.  Color me surprised, as there is NO inflation.

Thu, 09/06/2012 - 11:15 | Link to Comment Turin Turambar
Turin Turambar's picture

Hey Einstein,

Why don't you keep your dumbass comments to yourself.  I've personally refinanced several times over the years and have done it at ZERO cost.  Now in case you think I don't know what I'm talking about, I own a mortgage company.  ZERO was added to principal balance on refi.  I've done this very same thing for loads of customers over the last couple of years.  Even those who don't take a little higher rate, which is lower than their current one, in order to recieve a lender credit offsetting all refinancing costs can do a COST BENEFIT Anaylysis and come out ahead.  Are there people who have refinanced that probably shouldn't have?  Sure.  Still, it might be wise if you'd refrain from projecting your ignorance onto other people's decisions, the details of which you haven't a clue.

You're probably a Krugman fan judging from your intellecutal prowess.

Thu, 09/06/2012 - 11:17 | Link to Comment tahoebumsmith
tahoebumsmith's picture

Riddle me this TT... What will your entire industry do when the rates tick up say a mere 2%? Answer, NOTHING! Having rates so low for such an extended period of time will pretty much kill the mortgage industry when the FED is forced to raise rates to stave off a dollar collapse.

Thu, 09/06/2012 - 11:35 | Link to Comment Turin Turambar
Turin Turambar's picture

Who said anything about the entire industry?  The government and the Fed have pretty much trashed it.  I was responding to an ignorant comment generalizing a losing financial situation to specific individuals, the details of whose situation the poster hasn't got a clue. 

Are your reading comprehension skills so challenged that you didn't understand the topic of the posts?

Regarding a 2% increase in interest rates, for an INDIVIDUAL, it probably won't make sense to refinance.  As for the industry, yes, demand will dry up, so there will be less loans.  Thank you for the insight, but I got the gist of supply and demand a couple of decades ago. 

Thu, 09/06/2012 - 11:46 | Link to Comment viahj
viahj's picture

if mortgage rate go up 2% then that means that Ben has lost his grip on the yeild curve and we're all fucked at that point.  $16T bubble pop.

Thu, 09/06/2012 - 11:42 | Link to Comment serog
serog's picture

"Now in case you think I don't know what I'm talking about, I own a mortgage company"

Correlation does not imply causation.

Thu, 09/06/2012 - 12:47 | Link to Comment Turin Turambar
Turin Turambar's picture

serog,

 

"Correlation does not imply causation."

 

You are joking right?

Do you even know what it means?  You sure as hell don't know how to apply it correctly in context.  By stating that I have a mortgage company, what exactly did I say this caused?

I'll take a guess.  Are you trying to say that just because I work in the business that that doesn't mean that I'm competent or know what I'm talking about?  Logically speaking, this is true. But if, for example, you would prefer to learn chemistry from a layman who tells you that he can show you how to turn lead into gold, rather than an accredited chemistry teacher, then that is your choice.

I hope I'm just being trolled here.  It would be a sad day to learn that the average IQ on ZH has fallen into the double digits.

Thu, 09/06/2012 - 10:34 | Link to Comment analyzer_66
analyzer_66's picture

agrred, + he is a sociopathic whore mongering job/economy killer who likes dropping babies off the empire state building

Thu, 09/06/2012 - 10:35 | Link to Comment Dr. Engali
Dr. Engali's picture

Who in the heck can refinance in this market? They must have some serious equity to begin with.

Thu, 09/06/2012 - 10:41 | Link to Comment serog
serog's picture

/sarc

 

fixed it for you

Thu, 09/06/2012 - 10:47 | Link to Comment fonzannoon
fonzannoon's picture

I bought in '07. Put down 20%. Got a refi though in '10 because of a program that allowed me to avoid pmi even though I did not have the equity because I originally put down 20%. Called my buddy up a few weeks ago who is a mortgage broker. Those programs don't exist anymore. I asked him about a refi. He had a good, hearty laugh.

Thu, 09/06/2012 - 10:58 | Link to Comment serog
serog's picture

You wouldn't qualify but HARP 2.0 is still around isn't?

Thu, 09/06/2012 - 11:02 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

your loan has to be in trouble. 

Thu, 09/06/2012 - 11:11 | Link to Comment serog
serog's picture

No, your loan has to be current.  Underwater or otherwise.

Thu, 09/06/2012 - 11:03 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

Shit, 5/3 bank gave me a refi with the following fact openly stated to them -

Wife no longer has income, as she lost her job. - No income.

Wife and I Sold ALL paper assets. - No "assets".

$269 house now worht $200 (more drops to come) - No appraisal.

I purposesly defaulted on Chase and BofA credit Card - Poor payment history.

No problem!  Just sign here.  Of course, they just needed to resecuritize the note, get a new note, and get me to sign a electronic transfer of title document, all so they could flip that bitch right to Fannie or Freddie within DAYS of signing. 

Thu, 09/06/2012 - 12:36 | Link to Comment Turin Turambar
Turin Turambar's picture

It's a weird market DRH.  For all of the Fannie and Freddie talk, you never hear much about FHA.  FHA has been trying to plug the holes in their leaking boat for ages now.  FHA loans are no longer FHA.  What I mean by that is that its lineding standards are very different than just a few years ago.  Lending requirements have significantly tightened, which is good, but I still think FHA will eventually need a bailout, and it's not going to be a small one.

I think the last bubble we've got left is the one inflating in the equity markets.  When this one finally pops, there will be hell to pay because there will be nothing left for Bernsnake to inflate.  Things will inflate just fine without Bersnake once the dollar is rejected as the world's reserve currency. :-(

Thu, 09/06/2012 - 13:16 | Link to Comment DosZap
DosZap's picture

I purposesly defaulted on Chase and BofA credit Card - Poor payment history.

And the banks did not sell your written off balances to a HeadHunter?..................that will sue your ass to oblivion?.

In Texas they do, and if the NEW blood suckers will not settle for a reduced amount, or a repayment plan, your ass is in court, and the judge will decide how much garnishment comes from your pay,until it's all paid back.

NO escape, except thru Bankruptcy.

Thu, 09/06/2012 - 10:56 | Link to Comment Dr. No
Dr. No's picture

VA loans.  No questions = no lies = refi.

Thu, 09/06/2012 - 10:36 | Link to Comment yogibear
yogibear's picture

It's not if but when Benny Bernanke will continue dropping money from his helicopter. It's QE forever to keep Wall Street flowing and the year-end bonuses going.

Bernanke can't have rates high it would destroy his political enablers.

Thu, 09/06/2012 - 10:43 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

We have all become Pavlov's dog.

http://en.wikipedia.org/wiki/Ivan_Pavlov

Pavlov

Just remember.......it does not have to be this way. We hold the power. We just need to remember to remember.

Thu, 09/06/2012 - 10:52 | Link to Comment nonclaim
nonclaim's picture

At some point it'll be hard to control a large pack of salivating dogs...

Thu, 09/06/2012 - 11:00 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Thus the barbed wire and armed guards go up before the pack gets loose.

"We" think "they" don't know what's coming.......but they do. They most certainly do. And we always seem to play directly into their strongest hand.

It does not need to be this way.....if only we would remember to remember.

Thu, 09/06/2012 - 11:40 | Link to Comment nonclaim
nonclaim's picture

I agree, but knowing that they know that we play into their hands is part of the game and they know it... and so we do too. Still, there's only so much they can do to round up the pack before there are too many to handle.

Thinking outside the box, into a larger one, why not save on transport and meals? Debt is too high already... I'd scare the whole city into staying inside a sealed home...

Thu, 09/06/2012 - 11:10 | Link to Comment Kayman
Kayman's picture

Cog

You always bring me back to college days, listening to the sound of one hand clapping.

Unless you remember to forget, it is hard to get out of bed in the morning.

Watching the Dems vote Aye or Nay, reminded me of how insidious our system of MSM mind control is.

Always enjoy your stuff.

K

Thu, 09/06/2012 - 10:39 | Link to Comment buzzsaw99
buzzsaw99's picture

starve the beast(s)

Thu, 09/06/2012 - 10:39 | Link to Comment geewhiz190
geewhiz190's picture

but new mortgage originations are expanding, deliquency rates are plunging and foreclosures contine to fall,  show ALL the data not just the selective charts that suit your case.

Thu, 09/06/2012 - 10:40 | Link to Comment adr
adr's picture

No, homeowners don't care to refinance because they don't care to pay anymore. Nobody expects to have a job in ten years, so why pay for your house.

The real estate speculators are actually to blame for falling refinancing. Since the dupes are fghting with themselves and bidding up properties, people who haven't made payments in months can sell their home for more than it is worth before they even start the forclosure process.

One of my jobless neighbors has been on a deferred payment plan for his house for the past year, paying $500 a month on his $1500 mortgage. Instead of losing the house, he put it up for sale and got cash bids immediatly. The bids went 15% above what he paid for the house.

We are going for 1928, 1999, and 2006 combined. All the past bubble peaks getting blown into one. All we need now is for tulips bulbs to go crazy.

Thu, 09/06/2012 - 10:41 | Link to Comment MassDecep
MassDecep's picture

Bernankes replacement will do the same. What choices do they have at this juncture?

Store up on food Bitchez, your gonna need to eat...

Thu, 09/06/2012 - 10:41 | Link to Comment J 457
J 457's picture

Many owners would love to re-fi at lower rate but can't afford to because they would need to come out of pocket 20-30% of the loan amount due to negative equity.  Banks still want at least 20% cushion, so if you bought anytime from 2003-2007 without a sizeable down payment you're out of luck.

Thu, 09/06/2012 - 11:01 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Yup

Thu, 09/06/2012 - 11:09 | Link to Comment Seasmoke
Seasmoke's picture

is $120,000 down a sizeable deposit ????.......still cant refi !!!!!!!!!!!

Thu, 09/06/2012 - 10:42 | Link to Comment gjp
gjp's picture

Feels like this whole thing is about to hit escape velocity.  What happens in orbit?

Thu, 09/06/2012 - 10:42 | Link to Comment MFLTucson
MFLTucson's picture

What a disgusting mess of lies and distortions.

Thu, 09/06/2012 - 10:42 | Link to Comment analyzer_66
analyzer_66's picture

yea +1, high rates would auto-correct the RE market by crushing home prices back to normal pre-1999 levels and bankrupt the corrupt federal govt as well, higher rates would mean a forced COLA for SS receipients and higher interest payments on govt bonds AND it would crush all those banks that are paying .25% on savings accounts and CD's

Thu, 09/06/2012 - 10:43 | Link to Comment dwdollar
dwdollar's picture

You can take QE3 off the table now Ben... Oh wait, you really can't. Cuz the money junkies are still as insolvent as they ever were...

Let me break it down fur ya Ben. Central planners of yore didn't wake up one morning and say "Honey, I think I'm going to hyper-inflate the currency today."

It happened because they backed themselves into a corner they could never get out of.

Thu, 09/06/2012 - 11:16 | Link to Comment Kayman
Kayman's picture

 dwdollar

I have a minor quibble. The Fed and the Debt junkies have burned themselves into a corner and there is no way out.

After all, a wise man once said, "Deficits don't matter".

/snarc

Thu, 09/06/2012 - 12:41 | Link to Comment paint it red ca...
paint it red call it hell's picture

That is one of the politician's sound bites that spurred us into this mess. how wise it was is beyond debate.

Thu, 09/06/2012 - 10:44 | Link to Comment Robot Traders Mom
Robot Traders Mom's picture

So no chance for a refi-related QE?

Thu, 09/06/2012 - 10:46 | Link to Comment blueridgeviews
blueridgeviews's picture

ISn't that what "operation twist" is all about?

I wonder if the consumer is waking up or the consumer is just "done" with housing and mortgages for a while.

Thu, 09/06/2012 - 10:47 | Link to Comment Dr. No
Dr. No's picture

I called to refi.  Currently I am 4.65 fixed.  The new rates are tastey.  However, my PMI was locked in at time of purchase.  The Refi guy said I would no doubt save on interest on a refi, but due to 2-3 PMI rate hikes, I would end up paying more.  Anyone else get this too?

Thu, 09/06/2012 - 10:49 | Link to Comment fonzannoon
fonzannoon's picture

See my post above Dr. No. Same exact deal. I have the same exact rate too...funny (sad).

Thu, 09/06/2012 - 11:00 | Link to Comment adr
adr's picture

I currently pay $40 for PMI but on a refi that goes to $100. I'll save about $60 a month on my mortgage payment butthe PMI takes care of that. I am still $15k away from getting rid of the PMI and will be a little further away on a refi. I'll have to pay the $4k fee again for my loan.

So even though I'd save about $30k in interest over 30 years. I still lose on the deal. Better to just make an extra $1000 payment each year.

If you got a mortgage in the past four years, refinancing is just handing cash to the bank.

Thu, 09/06/2012 - 12:38 | Link to Comment paint it red ca...
paint it red call it hell's picture

your onto it. few are gaming QE timing/rate declines.

closing costs are where the rubber meets the road. rate declines would have to surge seriously from recent lows to offset 3-4 K $ closing costs. the whole premise of the article ill conceived.

however some banks are courting their high credit score customers with refi's of 299$ closing costs on sizeable rates decline. i assume this service is provided if original mortgage/closing was through them.

Thu, 09/06/2012 - 11:38 | Link to Comment dadichris
dadichris's picture

same here so I gave up trying

Thu, 09/06/2012 - 13:02 | Link to Comment El
El's picture

No, but I put 20% down so I don't have PMI.

Thu, 09/06/2012 - 13:07 | Link to Comment DosZap
DosZap's picture

Dr. No

You went FHA?,if you Re-Fi, to a Conventional, I do not think you are required to purchase PMI.

And you would get back ALL the PMI you paid up front in a check.

 

Thu, 09/06/2012 - 10:50 | Link to Comment Shizzmoney
Shizzmoney's picture

I pump my fist everytime I think about NOT owning a home in the this bullshit system.

People need less debt, not more.  Fuck the banks, fuck the Fed, and fuck mortgages.

Thu, 09/06/2012 - 12:55 | Link to Comment Dr. No
Dr. No's picture

I agree, but possession is important too.  The banks hold the note but I hold the house.  It can get sticky, but it is expensive to take away what I possess.

Thu, 09/06/2012 - 11:11 | Link to Comment larz
larz's picture

>

Thu, 09/06/2012 - 10:54 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

Why spend money to refi?  Take that money and buy Spy calsl.  Sell calls when the latest BS rumor ramps the markets.  Rinse repeat until you have the money to pay off your morgage.

Thu, 09/06/2012 - 10:56 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

That said, I just refi-ed from 30 yr fixed @ 4.75 to 20 year fixed at 2.85.

Thu, 09/06/2012 - 10:58 | Link to Comment Snakeeyes
Snakeeyes's picture

That is a good story. Particularly for REFIs. But, we may be running out of people that are deep in the money on refis.

Purchase apps are different. And still suck!

http://confoundedinterest.wordpress.com/2012/09/05/mba-mortgage-refinancing-and-purchase-applications-decrease-house-asking-prices-rise-in-august-rents-slow/

Thu, 09/06/2012 - 11:00 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I think what is really going on is that everyone who can refi has done so. I'd love to see the data on how many mortgage holders simply cannot refi due to either jumbo status (no government programs refi jumbos), or seconds on their property which put them under them the L/V ratios and thus get no benefit from these lower rates. I bet there are more owners who cannot refi than those who who can. And once you fefi, it makes no sense to refi again unless rates tick down an appreciable amount. At current rates, I don't see that occurring as much.

Diminishing returns as to the ever smaller group who can refi.

Thu, 09/06/2012 - 11:08 | Link to Comment adr
adr's picture

There are people addicted to refinancing. They just build the closing costs into the loan. Somehow they think they are saving money because their monthly payment gets smaller.

I know a guy who has refinanced his car three times. This guy says that he's happy because he is now paying $190 a month for a car that used to cost $350 a month.

I told him, yeah but you're probably going to end up paying $50k for your $20k car. He told me, what do I care I have and extra $160 a month to spend.

When you are dealing with facepalm logic like that, it really makes you want to jump off a bridge.

Thu, 09/06/2012 - 11:31 | Link to Comment jjsilver
jjsilver's picture

Quiet Title

Thu, 09/06/2012 - 12:41 | Link to Comment fledermaus
fledermaus's picture

I'm a RE Broker and a Mortgage Broker. I don't think consumers are front running QE X.  That gives them too much credit.  I just think that because rates spiked so fast there (@ last weeks through month) that anyone on the fence got off and decided not to... FOR NOW.

Yes I think the public expects rates to bounce along the bottom. Or a new Harp X.0 to come out to give them candy (It's election time!)  But 95% have no idea how any of this works. 

If any of you Zero-Hedgers are in FL and curious what you could get.  Give me broad outlines and I'll post what is possible. I've got a different lender for everything. And playing them off each other, as a Broker, is part of the fun 'sticking it back to the quasi-TBTF'.  Although, for years now I will not place loans anymore for the TBTF.  I've chosen all smaller Lenders, they are above top 20 nationally though- (but none of the TBTF.)

And the best thing is it's very easy to beat the TBTF's rates now.  I've been consistently beating Wells Fargo and Bank of America by 0.5% (HALF A POINT!) That is unheard of.  They are greedy bastards, and the FED colluding with Franken-D'odd 'reform' gave them more license to steal by trying to squeeze out the independent Brokers...

I think there is a way to write me privately on this too- should you want to actually get a Real Scenario priced out to the penny.

This is less a shameless plug- and more a hey I can help this ZH that has done so much to educate and entertain us all...

Thu, 09/06/2012 - 13:28 | Link to Comment pbmatthews
pbmatthews's picture

I definitely fall into this category--i.e. front running the Fed by not refinancing.  I already told my mortgage broker at what rate I am willing to refi at, and when it gets there let me know.

Anyone who refis with one of the TBTF banks (BOA, WFC, JPM) is just throwing money away.  It takes about 10 seconds on the internet to find a rate that is 50 to 100 BP lower for conventional 15 year and 30 year loans. 

As for these refinancing fees, most are a complete scam and are unneccessary.  If the Feds want to do something to fix the mortgage market the first thing would be to get rid of all the BS you have to pay particularly if you are "not underwater" on your mortgage.

Thu, 09/06/2012 - 13:28 | Link to Comment pbmatthews
pbmatthews's picture

I definitely fall into this category--i.e. front running the Fed by not refinancing.  I already told my mortgage broker at what rate I am willing to refi at, and when it gets there let me know.

Anyone who refis with one of the TBTF banks (BOA, WFC, JPM) is just throwing money away.  It takes about 10 seconds on the internet to find a rate that is 50 to 100 BP lower for conventional 15 year and 30 year loans. 

As for these refinancing fees, most are a complete scam and are unneccessary.  If the Feds want to do something to fix the mortgage market the first thing would be to get rid of all the BS you have to pay particularly if you are "not underwater" on your mortgage.

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