Thursday, October 16, 2008

Mortgage rates predicted to rise to 7%

From CNN:
Low mortgage rates have been the one bright spot in an otherwise devastated housing market, but now they're on the rise.

Historically rates are still very low, but experts say they could continue to creep up.

The average interest rate on a 30-year, fixed rate mortgage jumped to 6.6% late Tuesday from 6.06% the Tuesday before, according to Keith Gumbinger of HSH Associates, a publisher of mortgage information.

A borrower with a $200,000 mortgage would pay about $1,207 a month at 6.06%, and $70 more at 6.6%.

Mike Larson, an analyst with Weiss Research who participates in Bankrate.com's weekly mortgage rate surveys, expects to see rates top 7% in the next six months, and then turn back down.

That's quite a bit higher than rates have been, but it's no disaster.

Gumbinger blames the rate increase on the massive federal bailout. To fund the rescue and the new government guarantees, Treasury must sell a raft of new Treasury bills to raise money.

"Who even has the cash to buy them all?" said Gumbinger. "The Treasury has to offer higher interest rates to sell."

Mortgage rates tend to move in conjunction with Treasurys. ...

So, with Treasury yields on the rise, mortgage rates should continue to be a more expensive for the next few months, he said.

16 comments:

  1. Yep - so much for OPEC controlling the price of oil:

    "This report is playing right into the market's deepest fears, that the economy is slowing down and that demand is going to be nonexistent," said Phil Flynn, energy analyst at Alaron Trading in Chicago....

    But analysts doubt a production cut by OPEC, which investors view as increasingly likely, would do much to suspend oil's free fall. OPEC's decision last month to cut production by 520,000 barrels a day hardly made a dent in oil prices.

    "I think the market has already priced in another 500,000 barrel production cut and it doesn't care," Flynn said.

    He said OPEC's decision to move up their extraordinary meeting underscores the cartel's anxiety about oil's stunning drop in value. Analysts believe several OPEC members, particularly Venezuela and Iran, budgeted their national spending based on oil at much higher levels, meaning they'll face substantial revenue shortfalls as prices come down.

    "They're panicking," Flynn said. "If they come in and cut production and oil falls to $60, they're going to look like they've lost control, which they have."

    http://www.usatoday.com/money/industries/energy/2008-10-16-oil-thursday_N.htm?csp=34

    God knows how far down the rabbit hole this all goes.

    ReplyDelete
  2. Let's see...set the drama aside ("how far down the rabbit hole"...? ooooo, eerie!).

    It becomes apparent that economic recovery will be facilitated by the unexpectedly cheap price of oil. Goods and services can be made and delivered using existing infrastructure (combustion engines) and Joes Plumber and Six Pack can continue to be the sole occupant of their panel vans and dualie pickups while commuting to and from their job sites and their exurban homes. Extrapolate these consideration into the realms of food production and international trade, and you may see the big picture.

    At risk are the collective consciousness of climate change and energy independence; both of which will return to bite us all. But for now, the next president will breathe a sigh of relief at the currently cheap price of fossil fuel. Next time you have an imported beer in your hand or a bottle of french wine on your table, thank combustion engines and the cheap fuel that powers them.

    ReplyDelete
  3. "climate change and energy independence"

    Energy independence - yes.

    Climate change is horseshit, except for the fact that when lawmakers create policy on said horseshit it will hike energy prices unreasonably.

    ReplyDelete
  4. "Climate Change"

    Taking the global, aggregate view: the climate is changing. Whether it fits in your (Sarah Palin's) world view or not, the climate is changing. In spite of how the politicians spin it, or who (or what) the politicians point to as the cause; the climate is changing.

    There is no point in citing references to prove the fact of climate change. They are too numerous and readily available from too many different sources to name. The oneus is on you to cite references (that aren't funded by energy companies and/or the Bush Administration) that disprove the notion of climate change.

    You don't have children, do you?

    ReplyDelete
  5. "At risk are the collective consciousness of climate change and energy independence; both of which will return to bite us all."

    You are missing the point. The point I am trying to make - what if the whole thing was a bubble inflated ponzi scheme! What if we now, for the first time in 70 years have to deal with DEFLATION???

    You want a cleaner environment and energy independence? Well you may have just gotten them via deflation. If there is deflation - we have no economic recovery. $4 gas and 50K median incomes is better than the markets bet of $2 gas and 24K incomes. If this is a prolonged, nasty bout of deflation, SUVs never come back...they get replaced with 3 cylinder subcompacts or busses to the exurbs. China and India (also much poorer) switch back to the donkey and bicycle as a means of transportation.

    Since we dont have any money, no chance we will import our food and drinks from abroad. Suddenly - drill baby drill is an ananthema...Suddenly - we all use so much less dirty fuel that the Carbon Emissions into the atmosphere are what they were 50+ years ago.

    Is this likely? probably not...Is this POSSIBLE? Well given the stunning collapse of ALL commodity prices, the answer is yes.

    ReplyDelete
  6. You don't have children, do you?


    Actually no. Human activity is probably the #1 source of climate change. Eliminate all the people, the planet is saved (see the irony here :)

    Incidentally, there is a grain of truth to this. I drive an SUV and live in a big house. Yet at the same time, I am certain my carbon footprint is less than yours and your progeny combined. I am doing my part....

    ReplyDelete
  7. "Actually no. Human activity is probably the #1 source of climate change. Eliminate all the people, the planet is saved (see the irony here :)"

    Wow! What a unique and original thought! Why didn't someone else think of that first?

    I don't drive, although we own two cars, and my combined household income is a smidge more than $190,000. Our house is 1500 energy-efficient square feet, and we walk for groceries.

    YOU! OUT OF THE GENE POOL!

    Buh-bye.

    ReplyDelete
  8. "Actually no."

    Ah, Darwin was correct. We can always trust nature to do the right thing.

    ReplyDelete
  9. "I don't drive, although we own two cars, and my combined household income is a smidge more than $190,000. Our house is 1500 energy-efficient square feet, and we walk for groceries."

    Fair enough, but the fact remains, even with all these effeciencies, you and your children and your childrens children will do more to damage the earth than I will.

    ReplyDelete
  10. http://www.washingtonpost.com/wp-dyn/content/article/2008/10/16/AR2008101603604_Comments.html

    "For Tom Sutton, owner of Foxglove Flowers in Alexandria, falling oil prices bring only a little relief. More pressing: Foxglove's orders are down 75 percent."

    What? Cheap fuel and yet even less flowers imported from South America?

    "independent trucker Lee Klass, who was driving through Maryland yesterday, said he has been lamenting the high cost of fuel. Yet, now, it's becoming increasingly difficult for him to find loads to carry, as businesses stock fewer products because of declining consumer demand.

    "If they're not buying stuff, I'm not trucking stuff," he said."

    What? Cheap fuel and yet even less use of the reviled combustion engine? How can this be?

    Again, this is really stunning - not because oil is falling in price, but because of the way it is falling. Oil is often a leading indicator, now it is a lagging indicator - this should not be happening. Where is the bottom? God only knows. Is it 1980's demand with 2000s technology. Is it 1920's demand with 2000's technology. How much cleaner will the earth get just by doing nothing?

    Again, this does not portend a recovery and a return to the exurban lifestyle. This portends doom.

    ReplyDelete
  11. "even with all these effeciencies, you and your children and your childrens children will do more to damage the earth than I will."

    You own a mcmansion and drive an SUV. Your house is likely full of unnecessary crap, too. And that crap probably traveled a collective 100,000 miles to get to your pseudo-estate. The groceries in your 'fridge likely travel far, too, as do you, each and every day.

    So, from your perspective, everyone lives as you do. But that is far from reality. (Your perspective and reality are two different things, lest ye forget)

    Perhaps you'll attract a mate someday? Are you familiar with the sensations of sexual urges in relation to someone you are in love with? Those sensations exist for a reason, but not everyone can attract a suitable mate. (See: Darwin)

    ReplyDelete
  12. "Again, this does not portend a recovery and a return to the exurban lifestyle."

    So then you'll be abandoning your house in the 'burbs, along with the SUV? Why bother making the payments for all that empty space in the middle of a former and future cow pasture?

    ReplyDelete
  13. Yet despite your insults, the fact remains, even with all these ineffeciencies of mine, you and your children and your childrens children will do more to damage the earth than I ever will.

    ReplyDelete
  14. Sterile mcmansion dweller will commit suicide to conclusively decide the argument over who is more eco-friendly: childless people or people who have children. (Same effect, but the end result is accelerated)

    But first, mcman dweller will kill her parents as a retroactive gesture of goodwill toward nature and the earth.

    ReplyDelete
  15. Do you eat meat, McMan Dweller?

    You seem fairly bright. Look into the effects of bovine, pork, and avian farming on the environment. It dwarfs the impact of individual ownership of automobiles. It dwarfs the impact of heating and cooling the continental mass of useless suburban household square footage.

    I dare say that a car-free vegetarian yuppie (as in "urban") couple with a child or two has a smaller footprint than a single suburban SUV dependent mcmansion dweller.

    ReplyDelete
  16. Anon - thats actually funny!

    Chazu - see my comment on the "CNN Blames Greenspan" thread. Yes I have a big house and yes I drive an SUV. It is you who assume I have a McMansion in the Suburbs.

    As I noted, its an 1880s brownstone in DC. It is big, but I certainly added effeciencies when I renovated it (im a tightwad at heart). Renovation too, is far less energy intensive than new construction. Plus I get the beneift of extra insulation via the shared walls with my neighbors. In fact, thanks to the extremely thick solid brick walls, I often do not have to turn on the heat or cooling for days after a hot or cold snap.

    Further, just cause I have an SUV doesnt mean I drive it much. A few thousand miles a year tops. I would drive it more, but for the fact that there is no where to park in the city.

    The supreme irony in all this is, since I dont have any kids, I could care less about the environment. Yet thanks to the fact that I live an urban lifestyle, I happen to be far more carbon neutral than a friend of mine who commutes from way out in the exurbs in their prius. (they do "leed" certification work and they told me so).

    Still, the fact remains there is one of me and I will be dead in 30 years. Anon and his line will live on, perhaps hundreds of years, and no matter how earth friendly they may try to be, they will continually spew toxins into their beloved planet in amounts that I could never replicate. Ahh the irony!!!

    ReplyDelete