Comments on: It’s Friday and mortgage interest rates are…

By: Rhonda Porter

Rhonda Porter — Sat, 23 Jun 2007 16:26:49 +0000

tj,
I have never been one to advise WAITING for rates to go up or down.

If someone finds a home they want to purchase, they should as long as they qualify for mortgage that will be a proper vehicle for their financial needs.

If you want to wait, then do so.

I am going to close comments because I’m going to my sister’s house today to celebrate her birthday and I won’t be around to respond to comments.

Perfect timing for you suggestion, Michael!

By: tj

tj — Sat, 23 Jun 2007 16:12:38 +0000

Ok, since the use of 18% seems to confuse the topic I’ll use 6% and 8% instead to see if the discussion can around the impact of interest rates and not wether 18% will happen or not.

1. $600k home at 6%, $100k down. ~$3000k/month payment
2. 8%, $100k down, $3000k/month ~$500k home.

1. $500k mortgage
2. $400k mortgage

By: Michael Shedlock

Michael Shedlock — Sat, 23 Jun 2007 16:12:36 +0000

Ardell,

I agree. there are way too many comments on here and maybe they should be turned off.

By: Rhonda Porter

Rhonda Porter — Sat, 23 Jun 2007 15:46:14 +0000

Jay, I’ve never said that interest rates won’t raise. I think they will and are. Interest rates will also come down. I think we may see rates in the 7s but, as Ardell says…18%…I don’t think so.

The Fed does not controll mortgage interest rates…we’ve discussed this many times at RCG. They do take measures to try controlling inflation. Inflation impacts mortgage interest rates. That is essentially what I was discussing perviously on this post (I think it was here)….

By: ARDELL

ARDELL — Sat, 23 Jun 2007 09:43:30 +0000

Back in Philly I would say if we ever see interest rates at 18% while I’m writing for RCG “I’ll stand naked in Gimbels window”. But I’ll have to make it the downtown Nordstrom’s

We’re posting FRIDAY rates…let’s stay on topic and compare them to last week or last month, not some fantasyland where rates go to 18% so prices can come down to half their current prices.

By: ARDELL

ARDELL — Sat, 23 Jun 2007 09:40:44 +0000

I’ll stake my reputation that we are not going to see 18% interest rates this year. How about you Rhonda.

7% maybe. 18% NO!!

By: Jay

Jay — Sat, 23 Jun 2007 08:21:36 +0000

It seems to me that the question is “where are interest rates heading”. That is what will determine whether this discussion is relevant or not. Certainly if interest rates do not rise the whole issue is moot. If they do rise significantly, then the diiscussion is relevant and quite important (for both currunt homeowners contemplating selling and prospective buyers). Some posters above seem to have the opinion that interest rates will not increase much from here because the Fed will not raise them or risk significant fallout. Unfortunately, the Fed doesn’t set the interest rates that matter to real estate, the credit market does. And increasingly over the last several years it is foreign buyers of our bonds that set our rates. In fact, longer rates have been artificially held lower than the Fed has wanted due to these foreign buyers (”the conundrum”). I think you’d have to agree that the recent rise in rates had nothing to do with the Fed rasing rates – it was the result central banks buying less bonds and credit markets reacting to perceived increased credit risks (due to a re-rating of bad loans). Can this continue? Most certainly it can. Will it continue? We’ll have to wait and see. However, I think it’s quite misleading to tell people that interest rates won’t rise further because the Fed won’t let them!

By: ARDELL

ARDELL — Sat, 23 Jun 2007 07:21:14 +0000

tj,

We, like anyone else, like to horse around sometimes. But we like to have fun when horsing around, and running scenarios on far fetched hypotheticals is work to us If scenarios are based on reality, then everyone learns. If scenarios are based on far fetched figures, then we just confuse people who pop in to talk about reality and gain insight.

I received an email from someone saying they had “a project for me” with an Excel Spreadsheet of 25 investment properties I should fill in 10 columns with info that only agents can access. Many of the questions I would have to visit the property and talk with the owners to get the answers to. Sure the spreadsheet would have been interesting when done, but that’s not my idea of fun

We’ll be happy to talk about the here and now. Even reality based tomorrows. But people who want to talk about what they will do when prices get to half of what they are now need to BS on SB

By: tj

tj — Sat, 23 Jun 2007 06:39:49 +0000

Rhonda, not 20% down, $100k down and 18% was just a value to highlight the logic. I don’t understand the defensivness it’s just a discussion around interest rates and their potential impact on the purchase of a home. I don’t think I attacked anyone, at least I didn’t intend to. I know of people who think they missed the boat when interest rates went up and will have to wait until the next sub 5% era to think of buying a home. I was just not convinced that is the case and wanted to bounce around the idea among re-professionals. Either I was wrong or I just choosed the wrong day to ask.

By: Rhonda Porter

Rhonda Porter — Sat, 23 Jun 2007 03:15:09 +0000

Assuming 20% down on a 600k home at 6.75% (based on the pricing above) and 20% down on a 300k home at 18% (based on the fantasy rates mentioned via comments to this post). Your principle and interest are:

600k home at 6.75%: $3113
300k home at 18%: $3617

Which scenario makes more sense to you? Factor in the waiting for what ever rates may or may not do and…I’m with Sandy, the Fed is all over controlling interest rates. I believe they learned a lot from previous mistakes back in the Carter era… bottom line, everyone has to make their choices and live with them.

Personally, I would NEVER recommend waiting for 18% rates that would cause havoc on the economy…jobs…etc. Buy the time “if and when” that happened, your $600k home at 6.75% could be paid off!