Friday, July 22, 2005

Mortgage Rates Climbing

Mortgage Rates are increasing with "The average 30-year fixed rate mortgage inched higher from 5.76 percent to 5.78 percent, according to's weekly national survey of large lenders. The 30-year fixed rate mortgages in this week's survey had an average of 0.38 discount and origination points. (July 21 /PRNewswire-FirstCall)"

As this blog has argued before, rising mortgage rates are NOT a necessity for a bubble bursting. However, rising mortgage rates are a nice prick that will help pop the bubble.


  1. Nice blog, David.

    I usually frequent Ben Jones' blog but it's gotten so big and discussions get so off topic and heated that I felt the need to find a more laid-back hangout. Thanks for being here.

    I've been watching rates and am glad to see the rise, albeit small. Can't wait to pay a higher rate on lower principal! :)

    This "what do you want your monthly payment to be" nonsense reminds me of pushy car salesmen. When will these people wake up and realize the principal is the most important number.

  2. What's largely absent is any discussion of why the interest rates are rising. I would guess that the revaluation (albeit small) has a lot to do with the rising rates. Many have argued that the pegged Yuan-USD currency has artificially increased demand for US MBS's and most other monetary instruments. Once the government needs to start competing to get money, and with the Fed's tight rein on inflation, interest rates should rise to more historically average levels.
    Where I live, condo's are going for about $800 a pop; even wealthy retirees will rethink raiding their 401Ks to live in SD if inflation will eat up dollars.
    What's truly scary would be runaway inflation and diminished GDP; forget stagflation, here comes the Great Depression II.
    Can it be avoided?

  3. beachbubble, check out

  4. marinite,

    I added a link to your blog. Terrific blog.

  5. Thanks beachbubble for the kind words.

  6. david,

    BTW, it's "Marin" with an 'r' not "Main". Thanks. That's funny though because the yuppies here in Marin act as if they are the center of the world, the 'main' act, the 'main' focus of attention, etc.

  7. I fixed the name on the link.

  8. im looking forward to mortgage rates climbing, the current buyers are so stretched on finances that they DEPEND on the IO - low interest rates gimmicks - to get them into a home. The moment they edge up they will be priced OUT and demand will fall. - We know what will happy once that happens dont we :)

    Anyhow good chance of the Fed Lowering Rates AGAIN once they detect the market has fallen.

    What you think

  9. I think the Feds may lower rates again if the economy goes into a recession. ( The Feds probably will likely temper rates increases to walk a narrow line between inflation/need to borrow money/ housing bubble vs. GDP, recession)

  10. According to this Financial Sense article, the Fed is no longer in control:

    Normally, I don't go in to all this conspiratorial thinking. But this rings true to me. This is how wars start.

    Also, I have family (by marriage) in Taiwan with close connections to the military. There it is no secret that China wants to secure the straight with Taiwan so as to secure flows of oil to China. That's the first rationale for controlling Taiwan that I have heard that makes sense to me (the rhetoric about a "unified China", etc. being absurd to my mind just like the US' rhetoric about spreading democracy).