Very low interest rates got us into this mess, why don't we make them even lower!

[Climber]

U.S. regulator sees mortgage rate below 4%

(12-11) 04:00 PST Washington -- Government efforts to provide easier credit to consumers and jump-start flagging home sales could push mortgage rates "well below 4 percent," a federal regulator said Wednesday.

James Lockhart, whose agency oversees government-controlled mortgage giants Fannie Mae and Freddie Mac, made the comments at a meeting of Women in Housing & Finance, an industry group. He did not say how long it would take to achieve such a drop and has declined to provide a firm target for mortgage rates.

Treasury Department officials have been considering a program to lower mortgage rates, which would not apply to refinanced loans. Real estate agents and builders have been lobbying intensely in Washington for government efforts to spur home sales amid a severe decline in the U.S. housing market.

Rates fell sharply after the Federal Reserve announced plans late last month to buy up to $600 billion of mortgage-related securities and other debt issued by Fannie, Freddie and the Federal Home Loan Banks. Fannie and Freddie own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt.

On Wednesday, the national average rate on a 30-year fixed-rate mortgage fell to 5.49 percent, down from 5.54 percent on Tuesday, according to financial publisher HSH Associates. Rates, which plunged immediately after the Fed's move Nov. 25, have been hovering around 5.5 percent since then.

This whole government is just doing it's version of dumber and dumber!

WTF is the matter with these people? Or do they not care that they are only making matters worse in the long run as long as the bottom doesn't come on their watch?

Does anybody see how this is going to be good for the long-term health of this country, especially since the people who need to refinance the most are most certainly going to be denied?

 

[mlm]

Someone on NPR was commenting on this last week. The fact they aren't allowing the same rates for refi's is a major stumbling point on ever getting this through. Ironically, the measure was intended as a stimulus to the housing market, but nobody wants to buy now with the possibility of 4% rates (with no chance of refi) on the horizon.

Fuck all these bailouts. I can understand backing the banks, and even government spending on infrastructure, but it's gone too far.

 

[Xenophonii]

It's funny that they think lower interest rates are going to give lenders incentive to lend right now...

 

[insyder]

Ugh. Stupid is as stupid does.

 

[Climber]

It's funny that they think lower interest rates are going to give lenders incentive to lend right now...

All that it's going to do is to help people who need the least help right now!

If you have a ton of money and want to buy up houses in foreclosure to make huge profits down the road, this would be a huge windfall.

If you're in really bad shape with your mortgage, then you're really unlikely to get a refi.

This is shaping up to be another give-away and one that isn't going to solve anything.

 

[mlm]

All that it's going to do is to help people who need the least help right now!

If you have a ton of money and want to buy up houses in foreclosure to make huge profits down the road, this would be a huge windfall.

If you're in really bad shape with your mortgage, then you're really unlikely to get a refi.

This is shaping up to be another give-away and one that isn't going to solve anything.

Actually, from what I heard, the 4% was intended for first time home buyers, and this was intended as a stimulus primarily for home builders.

 

[insyder]

The more I think about this the more it seems that there may be no real, effective and fair solution for our country. If you "gift" money to the fucked borrowers, what do the prudent borrowers or renters get? If you reduce rates for new mortgages, what do existing(mostly) upside down borrowers get?

At the end of the day, someone is going to take it in the a$$. The question is, who directly exactly? Borrowers? Banks? Though the final answer it looks like is that the taxpayer will in the end.

 

[Caddywumpus]

Low rates dident get us into this mess. Interest Only Mortgages and lending to people who had no business buying homes did.

 

[tocino]

Low rates dident get us into this mess. Interest Only Mortgages and lending to people who had no business buying homes did.

+1 unfortunately

I blame the greedy mortgage companies and banks as well as the guys who make $30k a year who bought a $600K house

I feel a bit guilty about this, but prices and rates have fallen so much that I'm finally looking to buy my own place as opposed to renting. I do plan on living within my means, though. I think everyone can see some very real examples of what happens if you don't :|

 

[Caddywumpus]

Greedy companies, greedy people, house flippers and speculation. I had a teacher in spring 07 who was saying "yeah, monterey is recession proof. I just bought another property". Im pretty sure hes in the poor house now.

 

[MatthewB]

Yeah lets give low interest rates to morons who wouldnt qualify otherwise and have them get into a larger loan than before, but wait, lets' make this contingent on NOT allowing those who already have a loan with good payment history who just wants to refinance to lower his mortgage payment.

Morons. It's like helping those out who can't pay their mortgage, but doing nothing for those of us, who have never missed a payment. Reward the stupid and punish the good.

 

[tlsmikey]

This is good for me. Hell, i'll buy a house and move at 4%. I don't see how this helps those that made poor decisions to buy houses they couldn't afford...but oh well.

 

[mlm]

The problems are a LOT deeper than home values, and always have been. Out economy has structural problems, primarily our massive and continued trade deficits. We had them before the .com boom, and they were still there during the housing boom. We made shitpiles of excuses why everything was sustainable. For fucks sake, when people buying shit is the engine that keeps our economy going, there must be something wrong. Common sense would say we should be MAKING shit...not BUYING it.

Throwing money to try and revive the unsustainable housing boom, or throwing money at a decades old fucked up auto industry, or showering cash on our broken financial service industry is a bad idea.

Energy policy. Healthcare policy. Education, and Infrastructure.

Nothing new, but our future as a nation depends on these, not finding the next unsustainable economic boom.

 

[ILOAD2]

+1 unfortunately

I blame the greedy mortgage companies and banks as well as the guys who make $30k a year who bought a $600K house
:|

It suck that people are passing around BOGUS information...

First of all I AM NOT ATTACKING YOU.

I am just pointing out that your assessment of how and why we are here is not supported by the numbers.

Your essentially saying that Poor people bought beyond their means-thus creating a huge pool of defaults.

If you actually look at the numbers it is upper middle class and upper class PRIME borrowers that comprise the largest pool of defaults..

 

[Charmed]

It suck that people are passing around BOGUS information...

First of all I AM NOT ATTACKING YOU.

I am just pointing out that your assessment of how and why we are here is not supported by the numbers.

Your essentially saying that Poor people bought beyond their means-thus creating a huge pool of defaults.

If you actually look at the numbers it is upper middle class and upper class PRIME borrowers that comprise the largest pool of defaults..

Yes...of COURSE more property was bought by those with more money to spend. I think that goes without saying. Still, the point being made was that crazy variable % deals, no down loans were a huge part of the problem. People got talked into loans that were very enticing to the first time buyer. VERY affordable for the first couple of years, and then suddenly out of their reach. Additionally, with all the "zero down" BS, millions of people went into negative equity right off the bat.

A 30 year fixed loan at 4% to qualified buyers would be nothing less than fantastic for most of us.

 

[gnahc79]

It suck that people are passing around BOGUS information...

First of all I AM NOT ATTACKING YOU.

I am just pointing out that your assessment of how and why we are here is not supported by the numbers.

Your essentially saying that Poor people bought beyond their means-thus creating a huge pool of defaults.

If you actually look at the numbers it is upper middle class and upper class PRIME borrowers that comprise the largest pool of defaults..

+1, the ppl with risky/ginormous HELOCs sure didn't help.

We just got our place in Sept with a fixed rate of 6.75% and plan to do a refi early next year, hopefully in the 5-5.25% range

 

[mlm]

try this math:
Assuming:
= 115 million US households * 69% Home ownership rate = 79 million homes
= US Median Home Price peaked around $215K


I have no idea how many homes are mortgaged, but if one out of every 4 homeowners were 25% upside down in thier mortgages, the loss comes to a little over 1 TRILLION. Thats ALL homeowners...including the people who've owned homes for years, and would assume none ever accumulated any equity.

We're talking about bailouts a couple times that amount. Think about it.

 

[ILOAD2]

Yes...of COURSE more property was bought by those with more money to spend.

The fact of the matter was that they in fact did not have more money to spend.What we had was appraisers in cahoots with lenders.

Appraisers where giving values on homes no where near their worth-
Current home owners taking 2nds and thirds out based on fantasy values-
Buying 2nd and 3rd investment properties and repeating the false equity removal.

All the while the lenders KNOWING FULL WELL that they where just going to sell the mortgages onto the security markets where it was then carved up 2 and 3 more times polluting the securities. The non viable loans getting mixed in with the legit ones.The lenders knowing full well they would be paid up front and the mess would be a convoluted scheme that would take no skin off their noses till way after the fact and most likely the burden would be passed on to whom ever-most likely in the form of a public monies bailout..



Here we are...

 

[macadamizer]

If you want to blame someone for this mess, a good place to start would be the person that thought a share in a company that sold pet food over the internet was worth $100. The low interest rates in this country are a direct result of the dot com bust, injecting money into the economy to make up for the trillions in phantom wealth created by investors that evaporated virtually overnight. The housing crisis was created by the dot com crisis -- low interest rates meant that mortgages were easier to get, and we see where that lead. Low interest rates also meant that those who had money to invest couldn't invest it directly in mortgages, or put it into a bank, because the returns were too low -- so things like default swaps and mortgage-backed securities were created.

Blame homebuyers, blame realtors, blame banks, blame speculators, whatever -- it was bound to happen. It was inevitable once the government started down the path of trying to keep the economy moving by printing money -- you can get away with it short term, but you can't keep it up for years and years and expect to land softly. At some point, you can't create enough value to support the value of your own currency. You can only create so much money before it becomes worthless -- a lot of the oil prices going up was really the dollar losing value. Had we sucked it up after the dot com bust, we wouldn't be here today.

EDIT: I guess one of the upsides, if there is one, is that we got enough of the rest of the world to buy into the default swaps and the like that we created real estate bubbles in Europe and elsewhere as well, so all those economies are struggling too, and the value of the dollar vis-a-vis the Euro and other foreign currencies is rising, which is a benefit long-term for the U.S. I guess misery really does love company!

 

[Charmed]

The fact of the matter was that they in fact did not have more money to spend.

That contradicts you just said, but OK

In-fact, upper middle class housholds will generally have more money to spend than poor ones...by definition. I agreed with you that these upper middle class households were experiencing higher instances of default. That's because they generally had more money to spend on property purchases in the first place...until their payments climbed by $1000+/mo.