Capitalism, The Fed and Economic Policy
Comments
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We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
Yes I do. By that point, the securities market for mortgages has collapsed. So a lot of the independent lenders were gone. What they would do is package up loans and sell them in the market, but they were full of loans that were non traditional and designed for high net worth individuals, instead being used to extend people's buying power. These were tools like "stated income" , 3 year arms, 5 year arms, etc. These securities began to default leading to foreclosure, which led to a glut of homes, no one to buy them. Then the arms came calling and there was no equity to refinance because home prices were collapsing. And the income was insufficient was traditional loans, leading to more defaults. It was a vicious cycle.tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.
So by 2011, you were left with traditional banks that can back their loans with their deposits. That's the traditional method and more conservative. I'd be curious to know from anyone in the business if those non traditional loans are still being used widely. I would hope not.
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But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.
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Brilliantati©0 -
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
I know it very well. If I had known you could short the houses at the time I would have, the Big Short taught me a lot.mrussel1 said:
Yes I do. By that point, the securities market for mortgages has collapsed. So a lot of the independent lenders were gone. What they would do is package up loans and sell them in the market, but they were full of loans that were non traditional and designed for high net worth individuals, instead being used to extend people's buying power. These were tools like "stated income" , 3 year arms, 5 year arms, etc. These securities began to default leading to foreclosure, which led to a glut of homes, no one to buy them. Then the arms came calling and there was no equity to refinance because home prices were collapsing. And the income was insufficient was traditional loans, leading to more defaults. It was a vicious cycle.tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.
So by 2011, you were left with traditional banks that can back their loans with their deposits. That's the traditional method and more conservative. I'd be curious to know from anyone in the business if those non traditional loans are still being used widely. I would hope not.0 -
Oh I know allHalifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.
about it. I was doing mortgages during that time. Seen it go from ZERO DOC to excellent borrowers unable to get a loan. Greed absolutely took over. The shittier the loan, the more we got paid.0 -
I love telling this story.mrussel1 said:
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.
Banks know how to make money for sure.
Arizona, 2008. Looking for a house to rent as I just hit town ready to start a project. While looking for houses to rent I came across one that was nice and big but a little overpriced on the ask. Talking to the guy and at this time you would usually get half your note payment, not the whole thing, boy have times changed...
Anywho I start talking to him and he says he has 3 other houses, I'm impressed. I ask what he does for a living? He tells me he drives a forklift for fucking Costco... Dude makes $15 an hr and has 4 houses. I knew we were screwed when I heard that.
It seemed that this was happening everywhere.
Went to a new development and wanted to rent. Guy was some goombah from NY, talked a slick game and was full of shit. He asked why I would want to throw away all that equity in rent and not buy? My answer? Because everything I've read says prices will be falling.
His slick reply? "Nah man, I keep reading it's going up."
yeah, sure dude...
I waked out of there.0 -
Absolutely! I’d call for appraisals and they asked me “what value do you need to make the loan work”? Totally backwardsmrussel1 said:
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
It was a tumultuous time. I was fairly senior at a very large bank at the time, one that you all know very, very well. At the time, we were primarily a credit card lender and were just starting to buy regional banks in order to use deposits to securitize the credit cards. Our mortgage footprint was immaterial. But because the Asset Backed Securities (ABS) market for mortgages collapsed, the ABS market that we used to securitize credit card loans collapsed as well. At the time, my wife worked there too and I really thought this bank was in danger of collapsing. If you can't underwrite new credit cards, then your charge off rate just skyrockets because you don't have new, good loans to offset the bad ones. So I made my exit. Fast forward to today, they managed their way through it and are a top ten bank with almost 500 billion in assets. I was there for 14 years and it was great for me personally and professionally, but I'm glad I left. My wife ended up leaving within a few years as well.tempo_n_groove said:
I know it very well. If I had known you could short the houses at the time I would have, the Big Short taught me a lot.mrussel1 said:
Yes I do. By that point, the securities market for mortgages has collapsed. So a lot of the independent lenders were gone. What they would do is package up loans and sell them in the market, but they were full of loans that were non traditional and designed for high net worth individuals, instead being used to extend people's buying power. These were tools like "stated income" , 3 year arms, 5 year arms, etc. These securities began to default leading to foreclosure, which led to a glut of homes, no one to buy them. Then the arms came calling and there was no equity to refinance because home prices were collapsing. And the income was insufficient was traditional loans, leading to more defaults. It was a vicious cycle.tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.
So by 2011, you were left with traditional banks that can back their loans with their deposits. That's the traditional method and more conservative. I'd be curious to know from anyone in the business if those non traditional loans are still being used widely. I would hope not.0 -
Nick this isn't an uncommon story. I know of brokers not bothering with 10K profits to go after the bigger ones. My cousin was one writing loans at the time and wouldn't do any of the stupid ones that everyone was pushing. People thought he was NUTS for not writing them up.nicknyr15 said:
Absolutely! I’d call for appraisals and they asked me “what value do you need to make the loan work”? Totally backwardsmrussel1 said:
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?
Free money is what they called it.0 -
Great example. I forgot about the appraisers.nicknyr15 said:
Absolutely! I’d call for appraisals and they asked me “what value do you need to make the loan work”? Totally backwardsmrussel1 said:
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
No that is not why mortgage rates trended down, man. Wish it were that easy though. loltempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.www.myspace.com0 -
A big ‘ol toxic stew of greed, all the way around. Glad I stayed where I was, doing what I was doing, none the wiser. Hey, but get them repubs back in and they’ll dispense with that gubmint overreach oversight, right?mrussel1 said:
Great example. I forgot about the appraisers.nicknyr15 said:
Absolutely! I’d call for appraisals and they asked me “what value do you need to make the loan work”? Totally backwardsmrussel1 said:
You're right, but everyone was implicated in the disaster, certainly not just banks. Realtors convinced buyers that they needed more house and that equity would only rise. Brokers pitched these non-traditional loans. Securities managers bundled them. Investors bought them. Everyone made bad decisions.Halifax2TheMax said:
But not for “just because.” The market collapsed, partly due to banks bundling tons of shitty loans into a shittier commodity for Wall Street. Wells Fargo and many others were paying bonuses for originators to write loans regardless of credit worthiness. Greed took over. Shit doesn’t happen in a vacuum and memories are short. I was refinancing and it was fucking crazy what they were offering me for the top end of the amount. CRAZY. Made me think if I ever wanted to disappear to a low cost of living country……..nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.09/15/1998 & 09/16/1998, Mansfield, MA; 08/29/00 08/30/00, Mansfield, MA; 07/02/03, 07/03/03, Mansfield, MA; 09/28/04, 09/29/04, Boston, MA; 09/22/05, Halifax, NS; 05/24/06, 05/25/06, Boston, MA; 07/22/06, 07/23/06, Gorge, WA; 06/27/2008, Hartford; 06/28/08, 06/30/08, Mansfield; 08/18/2009, O2, London, UK; 10/30/09, 10/31/09, Philadelphia, PA; 05/15/10, Hartford, CT; 05/17/10, Boston, MA; 05/20/10, 05/21/10, NY, NY; 06/22/10, Dublin, IRE; 06/23/10, Northern Ireland; 09/03/11, 09/04/11, Alpine Valley, WI; 09/11/11, 09/12/11, Toronto, Ont; 09/14/11, Ottawa, Ont; 09/15/11, Hamilton, Ont; 07/02/2012, Prague, Czech Republic; 07/04/2012 & 07/05/2012, Berlin, Germany; 07/07/2012, Stockholm, Sweden; 09/30/2012, Missoula, MT; 07/16/2013, London, Ont; 07/19/2013, Chicago, IL; 10/15/2013 & 10/16/2013, Worcester, MA; 10/21/2013 & 10/22/2013, Philadelphia, PA; 10/25/2013, Hartford, CT; 11/29/2013, Portland, OR; 11/30/2013, Spokane, WA; 12/04/2013, Vancouver, BC; 12/06/2013, Seattle, WA; 10/03/2014, St. Louis. MO; 10/22/2014, Denver, CO; 10/26/2015, New York, NY; 04/23/2016, New Orleans, LA; 04/28/2016 & 04/29/2016, Philadelphia, PA; 05/01/2016 & 05/02/2016, New York, NY; 05/08/2016, Ottawa, Ont.; 05/10/2016 & 05/12/2016, Toronto, Ont.; 08/05/2016 & 08/07/2016, Boston, MA; 08/20/2016 & 08/22/2016, Chicago, IL; 07/01/2018, Prague, Czech Republic; 07/03/2018, Krakow, Poland; 07/05/2018, Berlin, Germany; 09/02/2018 & 09/04/2018, Boston, MA; 09/08/2022, Toronto, Ont; 09/11/2022, New York, NY; 09/14/2022, Camden, NJ; 09/02/2023, St. Paul, MN; 05/04/2024 & 05/06/2024, Vancouver, BC; 05/10/2024, Portland, OR;
Libtardaplorable©. And proud of it.
Brilliantati©0 -
Sounds like you got out before HARP then?nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.www.myspace.com0 -
Wasn't HARP just for refinancing existing loans?The Juggler said:
Sounds like you got out before HARP then?nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
I did FHA loans for a little after until I started to absolutely hate the job then I left.The Juggler said:
Sounds like you got out before HARP then?nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.0 -
Yep. Home Affordable Refinance Program. It ended in 2018 or 2019 but it was a glorious decade to be in the mortgage industry if you worked at a company who offered that program.mrussel1 said:
Wasn't HARP just for refinancing existing loans?The Juggler said:
Sounds like you got out before HARP then?nicknyr15 said:
We went from giving people loans who gave us just a name to not giving anyone loans. What a shit show that was. No middle ground.Halifax2TheMax said:
Do you remember the sub-prime mortgage crisis? Oh, from 2007-2010?tempo_n_groove said:
Do you remember in oh, 2009-2011 when banks weren't letting people buy houses and unless you had a 900 credit score couldn't get a loan?mrussel1 said:
Banks don't want people to buy homes. Their objective is to lend money at a better NPV vs the next best alternative. They won't lend if the spread between the discount rate and the market rate is too low. They will do something else with the money. So the fed rate is critical to the calculation. When the fed raises the rate, it's explicitly done to slow lending.tempo_n_groove said:
Yes Mortgage rates, they went down when the buying stopped. That is an interesting chart with he Tnotes and mortgages. I'll have to follow that one too.The Juggler said:
The fed hasn't lowered rates since early on in the pandemic. They increased rates 5 times during the timeframe in the chart above.tempo_n_groove said:
They actually lowered rates because buying came to a standstill. They had to do something. It's still not good enough though.The Juggler said:mrussel1 said:
Yes because the fed funds rate controls the rate at which banks borrow from each other. So if that goes up, banks must raise consumer interest rates, unless they are suddenly into charity lending.tempo_n_groove said:
New homes? Shit, all home , Holmes.The Juggler said:
Well for new homes, yeah, as they're dependent on building supplies and stuff.tempo_n_groove said:
Houses are about inflation when the price stays but the interest rate doubles.The Juggler said:
Home prices aren't really about inflation.tempo_n_groove said:
Gas, sure, houses and cars? Ain't seen nothin... I've been wanting a new car for a while but I can't with these damn prices. It's absurd.The Juggler said:
But the prices of things are coming down though. That's what the chart is referencing. Still too high, but coming down none the less.tempo_n_groove said:
I actually agree on that but when prices of things skyrocketed and don't seem to be coming down that's a problem.mrussel1 said:
It's not high. I would argue that it's been too low too long.tempo_n_groove said:
Doesn't help that the interest rates will still be really damn high...The Juggler said:Could be in that 2% range by end of the year if this continues...
Average house on Long Island is just stupid...
Home values on the other hand...
Car prices actually went down...so did bacon!
https://www.cnbc.com/2023/04/12/heres-the-inflation-breakdown-for-march-2023-in-one-chart.html
I don't know why NY hasn't got the memo on the price drops yet for the cars? I'll be sure to let you know when I actually see that happen.
The fed does not raise or cut mortgage rates. Mortgage rates are indirectly tied to the 10 year treasury note. Generally, mortgage rates are down about .75% in the last 6 months despite the fed raising key rates multiple times in that same timeframe.
The mortgage rates are in connection to the fed rates though. The Fed raised interest rates and gosh darn it, the mortgage rates went up too.
Despite the fed raising key rates, what, 3 or 4 times recently, mortgage rates have fallen over the last 6 months.
I would bet we see rates back to mid 5's by the Fall....and housing prices continuing to rise. This would all be without any rate cuts by the fed.
If you are talking about mortgage rates-- they dipped during this same timeframe largely due to the bond market. The bond market is basically trying to anticipate what's going to happen long term. Either a recession or successfully taming inflation without substantial job losses will spell good news for mortgage rates because that's an indication that the fed will eventually cut rates down the road in either of those scenarios. Future increases are baked in too. Watch what happens the next time Powell announces a rate increase. If it's the anticipated .25% again, I bet mortgage rates will like decrease slightly. My company is anticipating them to go down this summer. But who the hell knows?!
Mortgage rates will have to go down if they want the average person to own a home.
Banks know how to make money for sure.www.myspace.com0 -
Is this new mortgage proposal actually real or is it right wing hyperbole? Are we actually considering rewarding subpar credit and punishing people who did the right thing in their lives? Does anyone here actually agree with this?
0 -
As with just about everything, it is right wing hyperbole. No, people with lower credit scores are not paying less than people with higher credit scores. They just lowered the llpa's so the lower credit score borrower's aren't getting as crushed as they were before. So if you have excellent credit you are still getting the absolute lowest rate and best pricing out there, its just that the gap isn't as wide as it was previously.nicknyr15 said:Is this new mortgage proposal actually real or is it right wing hyperbole? Are we actually considering rewarding subpar credit and punishing people who did the right thing in their lives? Does anyone here actually agree with this?
https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023Is There Really a New, Unfair Mortgage Tax on Those With High Credit?
By: Matthew GrahamFri, Apr 21 2023, 5:06 PMSeemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal.
Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE."
So why would your nephew make such a claim?
This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year.
Wait... This news is from JANUARY?! Why are people talking about it now?Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.
Now consider that a closed loan has often been quoted and locked for more than 3 weeks--call it a month to be safe. Since these changes go into effect on loans delivered on or after May 1st, 2023, lenders began to implement them weeks ago. Many lenders implemented them months ago--especially for loans that are locked for longer periods of time.
So low credit borrowers are already getting a discount while high credit borrowers pay more?Not exactly, and this is where the confusion comes in. Also, from here on out, please note that there is no opinion offered here as to whether this is good/bad/etc. The only goal is to clear up confusion and offer facts.
The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.
So a low credit borrower isn't paying less than a high credit borrower? The gap between what they pay is just smaller than it was?YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there's no scenario where someone with lower credit will have a lower fee. In other words, don't go skipping those credit card payments in the hopes of getting a lower rate.
How about some color-coded charts/tables?I thought you'd never ask. Let's start with the changes that have everyone so upset. The following tables shows the DIFFERENCES in LLPAs before and after the change. RED = rising costs. GREEN = falling costs.++
If you only saw this chart, you could be forgiven for thinking someone with a 640 credit score was paying less than someone with a 740, but again, these are just the changes.
Now let's look at a table with OUTRIGHT LLPAs for the same matrix of credit scores and loan-to-value ratios. This is the NEW structure, after the implementation of the change.
As you can now plainly see, if you have a score of 640, you'll be paying significantly more than if you had a 740. Using an 80% loan-to-value ratio as an example, your LLPA at 640 is 2.25% versus 0.875% for a 740 score. That's a difference of 1.375%, or just over $4000 on a $300k mortgage. This is almost HALF the previous difference, and that's certainly a big change.
Yes, it's a big change, so why is the government doing this to people with higher credit?!Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.
Note in the first two tables that there is more of an improvement for the lower FICO rows on PURCHASES (i.e. home ownership vs refis).
Any other misconstrued news I need to know about?Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.
Don't you usually talk about financial markets in these newsletters?Indeed! But since we've taken a fair amount of space on more interesting stuff above, we can keep the market recap fairly short. Rates moved higher to start the week as economic data was strong on Monday morning. There were several other examples of reactions to economic data at home and abroad as the week continued, but all of them played out in a sideways range that continues to wait on the first two weeks of May for the most relevant input.
www.myspace.com0 -
Lol. Figured. Thank you for that article. Very informative.The Juggler said:
As with just about everything, it is right wing hyperbole. No, people with lower credit scores are not paying less than people with higher credit scores. They just lowered the llpa's so the lower credit score borrower's aren't getting as crushed as they were before. So if you have excellent credit you are still getting the absolute lowest rate and best pricing out there, its just that the gap isn't as wide as it was previously.nicknyr15 said:Is this new mortgage proposal actually real or is it right wing hyperbole? Are we actually considering rewarding subpar credit and punishing people who did the right thing in their lives? Does anyone here actually agree with this?
https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023Is There Really a New, Unfair Mortgage Tax on Those With High Credit?
By: Matthew GrahamFri, Apr 21 2023, 5:06 PMSeemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal.
Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE."
So why would your nephew make such a claim?
This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year.
Wait... This news is from JANUARY?! Why are people talking about it now?Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.
Now consider that a closed loan has often been quoted and locked for more than 3 weeks--call it a month to be safe. Since these changes go into effect on loans delivered on or after May 1st, 2023, lenders began to implement them weeks ago. Many lenders implemented them months ago--especially for loans that are locked for longer periods of time.
So low credit borrowers are already getting a discount while high credit borrowers pay more?Not exactly, and this is where the confusion comes in. Also, from here on out, please note that there is no opinion offered here as to whether this is good/bad/etc. The only goal is to clear up confusion and offer facts.
The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.
So a low credit borrower isn't paying less than a high credit borrower? The gap between what they pay is just smaller than it was?YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there's no scenario where someone with lower credit will have a lower fee. In other words, don't go skipping those credit card payments in the hopes of getting a lower rate.
How about some color-coded charts/tables?I thought you'd never ask. Let's start with the changes that have everyone so upset. The following tables shows the DIFFERENCES in LLPAs before and after the change. RED = rising costs. GREEN = falling costs.++
If you only saw this chart, you could be forgiven for thinking someone with a 640 credit score was paying less than someone with a 740, but again, these are just the changes.
Now let's look at a table with OUTRIGHT LLPAs for the same matrix of credit scores and loan-to-value ratios. This is the NEW structure, after the implementation of the change.
As you can now plainly see, if you have a score of 640, you'll be paying significantly more than if you had a 740. Using an 80% loan-to-value ratio as an example, your LLPA at 640 is 2.25% versus 0.875% for a 740 score. That's a difference of 1.375%, or just over $4000 on a $300k mortgage. This is almost HALF the previous difference, and that's certainly a big change.
Yes, it's a big change, so why is the government doing this to people with higher credit?!Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.
Note in the first two tables that there is more of an improvement for the lower FICO rows on PURCHASES (i.e. home ownership vs refis).
Any other misconstrued news I need to know about?Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.
Don't you usually talk about financial markets in these newsletters?Indeed! But since we've taken a fair amount of space on more interesting stuff above, we can keep the market recap fairly short. Rates moved higher to start the week as economic data was strong on Monday morning. There were several other examples of reactions to economic data at home and abroad as the week continued, but all of them played out in a sideways range that continues to wait on the first two weeks of May for the most relevant input.
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