Ouch: A jump in mortgage rates

A number of you have commented on the jump in mortgage rates this week -- Ace says he's seen Bank of America/Countrywide jumbos at 8.3%. Thanks for the tip, here's more:

From BankRate Monitor: "Mortgage rates skyrocketed this week as investors fretted about a pickup in inflation. The benchmark 30-year fixed-rate mortgage rose 41 basis points, to 6.37 percent. ... Four weeks ago, it was 5.57 percent. ... The 30-year fixed jumbo, for loans of more than $417,000, went up 39 basis points, to 7.55 percent."

Also: As Cal points out in the comment section, expectations for a big drop in jumbo rates are now diminishing.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo credit: AP

Comments

[jaded]

that's ok. In a year there won't be many houses over $417,000 anyway.

[arroyogrande]

This is what the mortgage rate spike looks like in graph form:

bankrate.com
http://tinyurl.com/322blz

Both conforming and jumbo fixed rate 30 year mortgages are nearing their highs. Who knows what will happen when the higher loan limits on conforming loans take effect.
- arroyogrande

[erinkeenan]

i was going to refi - after taking out my mortgage in july at 6.25. thought readers might find my experience with him interesting. i actually was pulling the trigger the night before the fed's emergency rate cut. the night before there was a sense the fed was going to move and although the fed and mortgage rates arent not that tightly connected i thought there'd be at least some movement downward. so i called off the refi unti the cut could shake out. he sends me this email like i know nothing (i trust this guy because he's a friend of a friend and i know how he gets paid etc.) and then at 11am the next day after the cut at 7am he says oh my god! i just saw the news! fyi he himself has several properties IN FLORIDA, had to shed one fancy condo in back bay of boston, had to fire most of his staff and cant even afford a website anymore. and now he's trying to sell me on an arm. i said 'im worried we are facing a stagflation situation...' he says 'stag-whah?'
LAWDY.

[JK]

Great! Anything to help move prices down even further!

[BottomFisher]

Ahhhhh yes.....sounds like the Bernanke vehicle borrowed from Greenspin is starting to stall and backfire.......oh dear....those pesky long term rates again.

[sunsetbeachguy]

Shhh, what was that sound?

I know, the greater LA housing market buckling.

The stupid Feds didn't read the law of unintended consequences.

[The Problemwithcaring]

On closer scrutiny, the signflipper's sign seems to say:

"New Homes Not Selling."

Is this the new Hillary-Method of selling houses?

Just start crying...

[El Guapo]

Arguments for downward pressure on prices:

Stagflation, Recession, Arm resets, rising interest rates, tighter lending standards (inc., but not limited to documentation of income, larger down payments), record foreclosures (some voluntary, some not), depreciating values, rising supply.

Reasons for a return to high prices:

Pent up demand? Wishful thinking?

[shockg]

Rates are going up? Great, that just means the doomsayers here will never be able to afford a home.

[backside 360]

new homes not selling:
http://www.360southbay.com/

[CaptHowdy]

shockg - Why do you want people to not be able to afford a home?

[El Guapo]

Shockg, I take no glee in watching this mess unfold, because everybody gets burned. I can vaguely remember stagflation from the 70's and people got squeezed big time. Everybody's standard of living is in decline. Moreover, all of the geniuses that spent like drunken sailors brought this on. That's where the anger comes from. Where were our jackass leaders when this historic disaster was brewing? Anyway, high rates will only hasten the fall and make prices go lower. People get qualified on the monthly nut. Personally, high rates help me - I can buy the house for a lot less, refi to a lower rate somewhere down the line and be in fat city. Not looking forward to what's ahead - friends getting foreclosed on, $50 cheese, etc. But, at the end of it, I will have a house and it won't be the biggest financial mistake of my lifetime.

[CD]

shockg, you are a schmuck.
People like you do not get it, will never get it and there is no need to explain to a schmuck like you what is happening here.

[Bill]

Absolutely ridiculous! This is definitely a good definition of how NOT to try and improve the housing market! The homebuyers and people looking to refinance there homes need to see some sort of stability in the housing market for an extended period of time, not just lower rates for a few weeks and then drive the rates back up through the roof... What about the people buying new consruction who have to sign and then wait 4-6 months for their house to be built and lock in their rate? Even worse, what about the builder and the contractors who are being put out of business and/or work? This whole situation is putting honest people out of work and increasing the unemployment rate! Way to go guys, keep up the great work!!

[firesale]

Shockg said:
"Rates are going up? Great, that just means the
doomsayers here will never be able to afford a home."

Buddy, give yourself somemore shock treatments!
It actually means that the price of homes will
drop even further until higher-rate mortgages can
cover for their purchase. Get it?

Adolfo, don't get too comfortable on the dunce seat.
Shockg is here.

[Cal]

shockg : "Rates are going up? Great, that just means the doomsayers here will never be able to afford a home. "

Isn't that what is happening anyways? Fewer people able to buy and fewer people able to sell? Now even fewer "homeowers" will be able to get out from under the home or liquidate what for many is their retirement savings. Fine by me, foreclosures and short sales will define the market.

[Tombstone Realty]

Ugh, I remember the stagflation of the 70s. I was really young, and noone seemed to work, we had our big old Chargers lined up at gas stations (I couldn't understand why I wasn't allowed out of the car when it stopped and STAYED stopped).

Part of me thinks it can't get that bad, the other part thinks it might be fundamentally worse.

By the time the rates lower enough, by the time the prices go down enough - these houses will be sitting there empty and unused until they rot. They'll have to be torn down, or they may be deliberately torn down because cities can't afford to provide security or maintenance.

Everyone will have to start all over again. I remember buildings around me boarded up as a child...looks like I'll see that again.

[John]

http://www.nytimes.com/2008/02/22/business/
22homes.html?hp

"Prodded in part by some of the nation’s biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses."

Are you kidding me?

People who should never have owned houses get bailed out, while those of us who rent and save get to foot the bill?

How about we just make arson legal for distressed homeowners and let the banks and insurance companies fight it out and leave us alone?

Let 'em know how you feel people:

comments@whitehouse.gov
senator_dodd@exchange.senate.gov

[someday the ants will eat grasshoppers]

Props to erinkeenan and el guapo.

What's happening in real estate is like a raging inferno. It's just feeding on itself at this point, with brokers and realtors forclosing, rates and inventory climbing, wages dropping...the hotter it gets, the further it spreads.

Tell people you care about that fire can burn.

Meanwhile, I'm keeping my steaks in the fridge until this thing gets down to the steady embers that are best for grilling. I look forward a cookout with the rest of you who were patient like we've been. Who's up for smores?

[vultur]

Whatch you talking 'bout Peter?

http://www.bloomberg.com/markets/rates/index.html

30 year fixed is 5.94% not 6.37%.

[Laker]

vultur,
please don't start again with your lack of knowledge...
Interest rates from bloomberg are national average and vary by markets. Rest assured that in highly depreciating markets like LA, the rates will be higher since there is more risk. Heck houses loosing 1-2% every month!
You probably don't trust me as i'm a " bitter renter" according to you. So go to bank rate, select CA and Los Angeles county. You will see that the lowest for conforming (less than $417,000) is 6% ! with about $2000 in fees. This sum will not buy you anything better than lawndale, so you need to take the jumbo (sorry the new junior conforming jumbo) that gets you 6.5% if you are willing to buy the rate for $9000 or 7.13% with $500 fees...
This is just the beginning my elderly friend...Based on current inflation, and economy, unemployment that is rising, the huge losses to the bank, and elevated risk...all these are pushing the long term 30 year fixed to double digits. I will start by seeing 10% as lowest possible!
Mark my words. (Two different mortgage officers hinted that to me.)