A rise in mortgage rates

Worth noting: The recent concern over the health of Fannie Mae and Freddie Mac has pushed mortgage rates higher.

From today's New York Times: "The average interest rate for 30-year fixed-rate mortgages rose to 6.71 percent on Tuesday, from 6.44 percent on Friday, according to HSH Associates, a publisher of consumer rates. The average rate for so-called jumbo loans, which cannot be sold to Fannie Mae and Freddie Mac, was 7.8 percent, the highest since December 2000.

From The Wall Street Journal: "Home-mortgage rates are nearing their highest levels in a year, adding to pressures on the already weak housing market."

Posted by Peter Viles
Hat tip: It All Happens On the Margin
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com

Comments

[Laker]

Peter,
All our in house resident bulls and RE agents are claiming high end will never go down, only up. There are plenty of rich people that will scoop all these houses. Everybody wants to live in Westwood, Gas prices will drive back people to city, etc...
from the NY Times: "The average rate for so-called jumbo loans, which cannot be sold to Fannie Mae and Freddie Mac, was 7.8 percent, the highest since December 2000."
Any fool knows that rates are in the process to go up, even Helicopter Ben acknowledges that.
Also congress has agreed on the Bailout bill and one point there is to limit GSE to buy up to $625,000. If you take this and couple that with the 7.8% for jumbos, and the fact that it was last at 2000....

All that equal to .................. Those good parts of LA will
get down to 2000-2001 prices!!!!!! Plain and simple.

[jb]

"congress has agreed on the Bailout bill "

time for a new Congress, these crooks should be drawn and quartered, plain and simple.

The rich bankers own our politicians, the middle class is history, and the rich get richer. The system is so crooked and rotten and evil. It is time to burn it down and start over.

[l.a.guy]

The GSE's have never been able to buy Jumbo's and Jumbo's have always been more expensive than conforming loans. It will be more difficult to get financing for a while, maybe even a couple of years, but eventually the dust will settle and people will get financing. (According to Redfin 64 homes have sold in Sherman Oaks/Studio City for over 1M in the past 3 months.)

People who are shopping for $1M homes are going to be less price sensitive and more concerned with quality of life issues like school districts and not sitting in traffic all day.

[Cal]

Sellers should worry a lot about rates.

Buyers should only worry about rates when they are low (like they are now) and know that you might have to sell when rates aren't low. Any new buyer will have to buy in the rate enviroment of the time and it is the seller that will be taking the hit to purchasing power not the buyer if the seller wants to sell.

If you want to argue the point respond back what you think would happen if rates were 8.5% right now instead of 6.5%.

[caliguy2699]

What happened to the junior jumbos saving the day?

[John D.]

Laker, Wishful thinking perhaps. The current numbers don't lie. There has been a lot of shock introduced to the system (higher rates, economic downturn, etc.), but a number of areas are steady. It's nothing to get emotional about.

[TakeFive]

Cal wrote:

“… respond back what you think would happen if rates were 8.5% right now instead of 6.5%.”

Buyers would buy, Sellers would sell. Same thing as when rates were pushing 17%.

You’d see more sellers carrying paper to get the deal done. More intra-family financing instead of traditional lending. Maybe assumable loans would become common again.

Granted, both prices, and the number of sales would likely drop, but deals would get done.

[puckhead]

I agree with John D, the economy has taken some huge hits but it’s still on its feet. We’ve seen the Bear Stearns & Countrywide takeunders, Indymac failing, Fannie & Freddie almost failing and a historic run up in oil. Oil is leveling off as hedge funds and speculators begin exiting this play and start searching for the next play. Weaker banks will fail but well run banks like Wells Fargo will emerge stronger and with more market share. But the biggest thing is that the oil ramp up has finally ended. Wherever oil ends up at, the economy will digest it and adjust to that level. The important thing is that it’s just needs to find an equilibrium level and stay at that range. The only bad thing is our dimwit President Dubya will take credit for this.

[shockg]

wow, the anger and frustration is just oozing from Lakers monitor. Thats what happens when you gamble and things don't play out like you planned. And I haven't seen anyone say the high end will keep going up. Just that it won't fall as hard as the 909 and Compton, Santa ana, etc. Nice try twisting words. FYI Laker, This is fact. The better areas haven't fallen much and we are three years into the correction. Your doom and gloom forecasts of what u hope will happen in 2-3 years is pure guesswork. Keep praying for prolonged misery so you can one day say "see see I told you so" Laker cheers for bad news all so he can some day buy a cheap house. What a selfish POS.

[Eastsiiiide]

Laker is losing it. Reeks of desperation. Laker, time to start looking for that house in Inglewood. Doesn't look like you'll be able to afford Westwood.....sorry.

[waitingforgodot]

A bunch of selfish people running around is what makes any modern economy flourish. We need more Lakers.

On a more serious note, I've seen houses in La Palma go for 20% and even more below peak prices. I guess places like La Palma, Cerritos and Fullerton aren't "nice places," (TM) but those price drops are not indicative of a resilient housing market that will only affect the "less desirable" areas of southern Cal.

Btw, if one takes a look at the job numbers, they aren't pretty, resilient economy or not.

[Fred]

Shockg, the high-end has always busted the exact same percentage as the low-end in bubbles past. Why would this one be any different?

And Cal, no one who buys a house today is going to be able to sell it for at least 15 years, so why try and project what interest rates are going to be like in the 2020s?

[Laker]

Eastsiiiide,
We are welcoming another guest/resident specuvestor to the blog.
How much underwater are you?
btw: I hate westwood or any part of west LA, Santa Monica.
Will not go there if you pay me! ..(well, if you pay me, i will go, but then I'll sell and move out of there)
The last time I was in Inglewood was for a LA Lakers game at the Forum back in 1996...
I will never get there again,...unless the Lakers move back to Inglewood from Staples.