Interest Rate Trends

[LexiGirl75]

Where are they going to move to or live???

Mortgages are still fairly low and will probably stay that way because the fed hikes the short term interest rates. This is why you hear about the inverted yield curve short term rates are higher than long term rates. The Fed's policy has been hiking short term rates, which is the rate that it charges banks for overnight loans, to break inflation and now they are trying to get rid of those interest only loans and ARMs. I bet in a couple years there will be quite a few houses on the market purchased by people with ARMs and interest only loans that will not be able to afford them. Don't look for more than two or three more rate hikes unless oil shoots over $100 a barrel and stays there for a long time.

That sounds really devastating... But, why can't they refinance those arms at the end of the terms? Selling sounds like a worse situation because you won't be able to find anything that is as affordable as what your loan currently is (aside from the ARM or I/O loan rate).

That's what worries me, with the price of homes now and what they may end up becoming will I be able to upgrade my living at a decent price or will I be paying an outrageous cost just to move up to the next level. Eventually I want to sell and get a Single family dwelling. And, I don't want to pay four times what I believe it should cost. I want a good deal (again, )

 

[FromTexas]

That sounds really devastating... But, why can't they refinance those arms at the end of the terms? Selling sounds like a worse situation because you won't be able to find anything that is as affordable as what your loan currently is (aside from the ARM or I/O loan rate).

That's what worries me, with the price of homes now and what they may end up becoming will I be able to upgrade my living at a decent price or will I be paying an outrageous cost just to move up to the next level. Eventually I want to sell and get a Single family dwelling. And, I don't want to pay four times what I believe it should cost. I want a good deal (again, )

Because the people who bought them won't get interest at under 8% in 2-3 years and they calculated barely financing them at 5.5% just to get a big home... because people are stupid that way. In three years, the IO market will have dried up because they will see that if they refinance 8% IO/ARM they will be paying 9-10% shortly because its variable and they can have it stuck to them that way. So, their choice is sell or go fixed at 8%+ which they probably could never afford to pay in the first place.

 

[LexiGirl75]

Dannnnnnnnnnnnnggggggg!!!

Because the people who bought them won't get interest at under 8% in 2-3 years and they calculated barely financing them at 5.5% just to get a big home... because people are stupid that way. In three years, the IO market will have dried up because they will see that if they refinance 8% IO/ARM they will be paying 9-10% shortly because its variable and they can have it stuck to them that way. So, their choice is sell or go fixed at 8%+ which they probably could never afford to pay in the first place.

Are you kidding me???? People whose mortgages would have been at a higher rate initially took out an I/O or ARM to lower their payments and will end up having to pay almost double in the next 2-3yrs of what they could ONLY afford to start? (I had to repeat to let it sink in).

They better hope the value of the house doubles because trying to sell something that most people won't be able to afford in 2-3yrs (big mortgage = big cost) is not going to be easy.

There has to be alternatives for these people like renting out their extra rooms or basement (not that anyone really wants to do this). I just imagine a influx of people selling by force and feeling all types of devastation behind their decisions.

It kind of reminds me of the bankruptcy situation everyone found themselves in. back in the 90's. I guess if people can recover from that then I guess they will recover from this.

Now, my new question is Why haven't employees gotten a government issued Cost of Living Increase. If I had to buy a home today, I know I would be overpaying. I see people buying in my community for twice what I paid. I don't want to pay 2-3times what someone else paid when I decide to upgrade.

 

[pixiegirl]

Accord, Camry, Avalon???

 

[Nickel]

Accord, Camry, Avalon???

Camry Hybrid.

 

[pixiegirl]

Camry Hybrid.

Nah, neither the hybrid Camry or Accord offer any better fuel efficiency over the 4cyl versions so the extra money that you spend on them isn't really worth it. B swears that 4 cyls last longer than 6cyls but I don't know if I'm buying that story.

 

[LexiGirl75]

Accord???

Accord, Camry, Avalon???

How did that make the list? Have you seen the new VW??? (commercials )

 

[Nickel]

Nah, neither the hybrid Camry or Accord offer any better fuel efficiency over the 4cyl versions so the extra money that you spend on them isn't really worth it. B swears that 4 cyls last longer than 6cyls but I don't know if I'm buying that story.

:shrug: Don't try to use scientific data on me, I drive a new XTerra...you can only get more efficient from there.

 

[Nickel]

How did that make the list? Have you seen the new VW??? (commercials )

When we were car shopping I wanted an Altima 3.5SE, but they didn't make it with the options I wanted, so we looked at Jettas and Passats (TDI), but I wasn't impressed with the interior or backseat space, so I ended up pleading my case for what I really wanted, the XTerra, and I don't know how we'd live without it.

 

[pixiegirl]

:shrug: Don't try to use scientific data on me, I drive a new XTerra...you can only get more efficient from there.

18mpg on premium gas now. I will be so happy to put regular gas in a car I won't know what to do.

I guess I don't "need" a 6 cyl car but I like the looks of them better. They are easier to get with the options I want, like leather.

I've had such good luck with Toyota and Honda products that I won't even look at anything else.

 

[Nickel]

18mpg on premium gas now. I will be so happy to put regular gas in a car I won't know what to do.

I guess I don't "need" a 6 cyl car but I like the looks of them better. They are easier to get with the options I want, like leather.

I've had such good luck with Toyota and Honda products that I won't even look at anything else.

I get about 16 around town, 21 hwy, but since most of my driving is a combination of the two I average at about 18.5. Luckily I can just put cheap gas in it, but it's still expensive to fill up. And driving to Richmond all the time isn't helping. I don't complain though, I have a lot more room for the dog and luggage and stuff than I would if we'd gotten a car.

 

[Pete]

When we were car shopping I wanted an Altima 3.5SE, but they didn't make it with the options I wanted, so we looked at Jettas and Passats (TDI), but I wasn't impressed with the interior or backseat space, so I ended up pleading my case for what I really wanted, the XTerra, and I don't know how we'd live without it.

It is amazing "How did we survive without this" thing we have going on. I was talking to a guy the other day who was wanking about gas for his Excursion. I said WTF did you buy the Exxon Vadez for in the first place. Answer: "Well I have 4 kids" Since when did it become a requirement that each kid is entitled to 30 cubic feet of vehicle space? Anyone remember back in the day when Dad and Mom packed the troop into the Caprice Classic Station wagon and headed to Disney from Michigan? You sat in your seat and daydreamed or actually talked about stuff and if you started wanking your dad pulled over and conked you on the melon.

 

[DoWhat]

It is amazing "How did we survive without this" thing we have going on. I was talking to a guy the other day who was wanking about gas for his Excursion. I said WTF did you buy the Exxon Vadez for in the first place. Answer: "Well I have 4 kids" Since when did it become a requirement that each kid is entitled to 30 cubic feet of vehicle space? Anyone remember back in the day when Dad and Mom packed the troop into the Caprice Classic Station wagon and headed to Disney from Michigan? You sat in your seat and daydreamed or actually talked about stuff and if you started wanking your dad pulled over and conked you on the melon.

"MOM, so and so is touching me"
MOM, so and so is on my side"

 

[Pete]

"MOM, so and so is touching me"
MOM, so and so is on my side"

 

[Nickel]

It is amazing "How did we survive without this" thing we have going on. I was talking to a guy the other day who was wanking about gas for his Excursion. I said WTF did you buy the Exxon Vadez for in the first place. Answer: "Well I have 4 kids" Since when did it become a requirement that each kid is entitled to 30 cubic feet of vehicle space? Anyone remember back in the day when Dad and Mom packed the troop into the Caprice Classic Station wagon and headed to Disney from Michigan? You sat in your seat and daydreamed or actually talked about stuff and if you started wanking your dad pulled over and conked you on the melon.

It's a figure of speech. I don't biatch about how much I pay for gas, so I don't see how it's anyone else's concern. :shrug:

 

[awg9tech]

... But, why can't they refinance those arms at the end of the terms? Selling sounds like a worse situation because you won't be able to find anything that is as affordable as what your loan currently is (aside from the ARM or I/O loan rate).

That's what worries me, with the price of homes now and what they may end up becoming will I be able to upgrade my living at a decent price or will I be paying an outrageous cost just to move up to the next level. Eventually I want to sell and get a Single family dwelling. And, I don't want to pay four times what I believe it should cost. I want a good deal (again, )

You're assuming an increase in home prices. The bank will not ReFi the loan for the full price you owe if the home is "worth" less than what you paid for it. Some people in Phoenix and some parts of California are on the verge of being underwater on their loans.

 

[FromTexas]

Avalon

I'm trying to convince the wife thats what she wants in two years instead of the Sebring. She loves the Sebring but I think the newer ones look a little squashed. An older one might have been better.

 

[FromTexas]

You're assuming an increase in home prices. The bank will not ReFi the loan for the full price you owe if the home is "worth" less than what you paid for it. Some people in Phoenix and some parts of California are on the verge of being underwater on their loans.

That is an incorrect statement. Home prices aren't devaluing below what people paid for them. They are not getting the re-sale values that people thought they would be getting. When you read between the lines, that is often the case. What you do have is people who pulled out money in second mortgages assuming their home sale value would be higher so they could take out 100-110% on those second mortgages... those people are hurting. Again, that is human stupidity.

So, when the media says home prices falling they are typically saying home price growth is falling. It makes the story have a bigger punch when you see home prices falling... more people read it.

Here is an example from May 1st from Pheonix. You can see that media home value has decreased year over year and sales are still going at a good moderate pace.

http://www.zwire.com/site/news.cfm?newsid=16566295&BRD=1817&PAG=461&dept_id=68561&rfi=6

The only ones decreasing prices are home builders in that area. They are offering incentives to finish selling out their houses. If you read further, they are offering them with only basic options and no choices when they do that. It is just to finish out neighborhoods. The builder loses more by holding the property instead of moving on.

 

[awg9tech]

You're right

That is an incorrect statement. Home prices aren't devaluing below what people paid for them.

I was wrong:

http://moneycentral.msn.com/content/Banking/Homefinancing/P148861.asp#msnhp
http://www.latimes.com/classified/r...877609.story?coll=la-class-realestate-selling
http://www.kansascity.com/mld/kansascity/news/consumer_news/13963021.htm

 

[czygvtwkr]

That sounds really devastating... But, why can't they refinance those arms at the end of the terms? Selling sounds like a worse situation because you won't be able to find anything that is as affordable as what your loan currently is (aside from the ARM or I/O loan rate).

That's what worries me, with the price of homes now and what they may end up becoming will I be able to upgrade my living at a decent price or will I be paying an outrageous cost just to move up to the next level. Eventually I want to sell and get a Single family dwelling. And, I don't want to pay four times what I believe it should cost. I want a good deal (again, )

I agree, but these people will have nobody to blame but themselves.