Wednesday, April 26, 2006

Mortgage Interest Rate Watch


Source: Bankrate.com

20 comments:

  1. Anyone going for an ARM now is reeeaalllyy stupid. They should get a 30 fixed an buy some points instead.

    ReplyDelete
  2. According to last week's Freddie Mac Primary Mortgage Market Survey the 30 year fixed averaged 6.53 percent, with an average .6 point. That is much higher then the numbers you are quoting. In addition the Freddie Mac data is at least a week old at this point and the new report comes out tomorrow. After the rather large increases in rates the past week I expect to see the average 30 year fixed rise to around 6.61 percent with an average .5 point. We will see tomorrow. (This estimate I gave is completely off the cuff.)

    Eric In DC


    http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputWk.jsp?week=16&ending=20060420

    ReplyDelete
  3. Eric in DC,

    You can't compare across different surveys. The Freddie Mac survey differs greatly from the Bankrate survey.

    Not a problem, because it's not that the actual numbers are important, but the trend.

    grim

    ReplyDelete
  4. Bankrate.com is a horrible place to find reality in mortgage rates.

    I confess that I don't know where they get their numbers from, but I assure you it all has to do with the fact that they are a lead generation site. When someone clicks on these rates, they collect borrower information and sell it to mortgage lenders/brokers.

    For this to work, you must have a rate that appears lower than the rest of the market.

    The Freddie Mac site mentioned above is the best place to see where mortgage rates are really at. Then you won't feel like you were bait and switched.

    Below is an article that I wrote about: The Truth about Online Mortgage Rates.

    http://blog.pacesettermortgage.com/2005/11/the_truth_about.html

    ReplyDelete
  5. "Anyone going for an ARM now is reeeaalllyy stupid. They should get a 30 fixed an buy some points instead. "

    Why? The Fed has given hints that it doesn't intend to raise rates any further.

    These rates are still, historically speaking, quite good. Those of you hoping for a market crash are probably going to be disappointed.

    ReplyDelete
  6. Everyone, take a look at one of today's headlines on CNN.com. prices have fallen back, but March sales are the highest they've been in over a decade.

    "New home sales soar. March gain of 13.8% the biggest in 13 years."

    http://money.cnn.com/2006/04/26/news/economy/newhomes/index.htm?cnn=yes

    ReplyDelete
  7. Argh!

    ...my faith is being shaken. When will this bubble pop?! I've been a "believer" for so long...four years

    Just did my morning scan of about 20 economics/real bubble blogs and cannot believe that this sucker is still alive.

    There are so many negative systemic risks looming (high oil, high interest, coming storm season, threat of Iran war...on and on). Couple that with the inevitable megatrends (US public/consumer debt, aging population, rising entitlement $ ...etc.)

    I have rarely seen periods of time with so much risk AND a market willing to accept so little payment in exchange for assuming that risk.

    wow!

    ReplyDelete
  8. "I have rarely seen periods of time with so much risk AND a market willing to accept so little payment in exchange for assuming that risk."

    what about the stock market crash of 2000? Could anyone justify those stock prices at the time? Some people were saying hey, this prices are totally insane, but if you were to believe them, you were considered a fool who was going to missing out on the biggest opportunity of your life.

    Several of the trends mentioned have been around for awhile and while legitimate no silver bullet has been created to do away with them. Unfortunately it usually takes something to happen before people will do anything about it. Think about some of the major disasters that have gone in recent years, many times afterwords there are reports or other people usually warning others of what could happen yet nothing is done about it. (9/11, Katrina)

    People in general seem to be reactive in nature, perhaps its because it is great visibility in recovering from adversity than there is in avoiding it (because you can never be sure how much you've done).

    ReplyDelete
  9. I think we are seeing what the economists call "loss aversion"

    that is the tendency of people to avoid monetizing paper losses -- making them real

    so the people who are underwater and who should sell don't -- keeping it 'unreal'

    eventually, their hand is forced (you can only avoid the creditors' calls so long)

    this sucker is going crack like a bull whip when it does

    "Argh"

    ReplyDelete
  10. GRIM and Eric in DC.

    You are both right. The interest rates in the picture are actually very deceptive and low. Essentially, they are a compilation of rates that are doctored with points and "other fees", so the number is skewed lower ALWAYS. To get a more accurate picture, I recommend clicking on the "Interest rate roundoup" on the Bankrate site here:

    http://www.bankrate.com/brm/static/rate-roundup.asp

    I personally like to use ABN AMRO's website:

    www.mortgage.com

    Because they never put points into their calculations. Whenever you have multiple lenders compared, you will get the results skewed because they know people focus on rates, not points.

    ReplyDelete
  11. Anon "nyone going for an ARM now is reeeaalllyy stupid. They should get a 30 fixed an buy some points instead. "

    Why? The Fed has given hints that it doesn't intend to raise rates any further."

    The Fed could stop tomorrow and long-term rates can still rise--look how long it took for them to really start rising after over a year of Fed hikes! They have some cathcing up to do, and it's ain't gonna be pretty...

    ReplyDelete
  12. Anon said "The Fed has given hints that it doesn't intend to raise rates any further."

    That may be true, but mortgage rates aren't closely tied to what the fed does. A better indicator of future mortgage rates would be the bond market.

    ReplyDelete
  13. "The Fed could stop tomorrow and long-term rates can still rise--look how long it took for them to really start rising after over a year of Fed hikes! They have some cathcing up to do, and it's ain't gonna be pretty... "

    You mean, you hope. Keep wishing harm to others. I'm sure that will only lead you to good things.

    ReplyDelete
  14. Keep an eye on the 10 year treasuries .... these strongly coorolate with mortgages .... Upward trend

    ReplyDelete
  15. "The Fed could stop tomorrow and long-term rates can still rise--look how long it took for them to really start rising after over a year of Fed hikes! They have some cathcing up to do, and it's ain't gonna be pretty... "

    You mean, you hope. Keep wishing harm to others. I'm sure that will only lead you to good things.

    ReplyDelete
  16. Keep an eye on the 10 year treasuries .... these strongly coorolate with mortgages .... Upward trend

    ReplyDelete
  17. Everyone, take a look at one of today's headlines on CNN.com. prices have fallen back, but March sales are the highest they've been in over a decade.

    "New home sales soar. March gain of 13.8% the biggest in 13 years."

    http://money.cnn.com/2006/04/26/news/economy/newhomes/index.htm?cnn=yes

    ReplyDelete
  18. Argh!

    ...my faith is being shaken. When will this bubble pop?! I've been a "believer" for so long...four years

    Just did my morning scan of about 20 economics/real bubble blogs and cannot believe that this sucker is still alive.

    There are so many negative systemic risks looming (high oil, high interest, coming storm season, threat of Iran war...on and on). Couple that with the inevitable megatrends (US public/consumer debt, aging population, rising entitlement $ ...etc.)

    I have rarely seen periods of time with so much risk AND a market willing to accept so little payment in exchange for assuming that risk.

    wow!

    ReplyDelete
  19. Eric in DC,

    You can't compare across different surveys. The Freddie Mac survey differs greatly from the Bankrate survey.

    Not a problem, because it's not that the actual numbers are important, but the trend.

    grim

    ReplyDelete