Mortgage Rates- holy sh@t
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That is an INSANELY low rate for such a long term and only possible with taxpayer subsidy given in the form of gov't guarantee. A more realistic, laissez-faire rate would be around 10% over risk-free rate, or ~11%.
You guys have it all wrong.
You WANT to buy when interest rates are HIGH not when they are low. I know this seems counter-intuitive but house prices are based on the ability to pay.
If you buy a 400K house at 6% with monthly payments of 3k (just picking numbers) and interest rates go to 10% you will lose whatever equity makes the payment equivalent.
In the long run, you are much better off buying the same house for 300K at 10% with payments of 3k. When interest rates go back down (if they do) your house will appreciate (assuming that the market is healthy).
You WANT to buy when interest rates are HIGH not when they are low. I know this seems counter-intuitive but house prices are based on the ability to pay.
If you buy a 400K house at 6% with monthly payments of 3k (just picking numbers) and interest rates go to 10% you will lose whatever equity makes the payment equivalent.
In the long run, you are much better off buying the same house for 300K at 10% with payments of 3k. When interest rates go back down (if they do) your house will appreciate (assuming that the market is healthy).
skellington, would you mind explaining that more fully?
thanks,
d.
when I bought my first house the fixed rate was 12.5
the point is valid that many homes' prices are based on the monthly payments. this clearly doesn't apply to all houses and neighborhoods (sadly especially not the ones I like).
But yeah, to have a really nice home have the price depressed to 200k or something because the mortgage rate is high would be a really great buy if you knew that interest rates were soon going to go back down to 5% (you just re-fi then, and your home is likely not as "price impaired" by the high mortgage rates.
But yeah, to have a really nice home have the price depressed to 200k or something because the mortgage rate is high would be a really great buy if you knew that interest rates were soon going to go back down to 5% (you just re-fi then, and your home is likely not as "price impaired" by the high mortgage rates.
30-year mortgage rates rise sharply
Thursday October 30, 12:30 pm ET
By Martin Crutsinger, AP Economics Writer
Rates on 30-year mortgages rise to 6.46 percent, highest in three weeks
WASHINGTON (AP) -- Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 6.04 percent last week. The sharp increase pushed 30-year rates to the highest level since the week of Oct. 16.
http://biz.yahoo.com/ap/081030/mortgage_rates.html
Thursday October 30, 12:30 pm ET
By Martin Crutsinger, AP Economics Writer
Rates on 30-year mortgages rise to 6.46 percent, highest in three weeks
WASHINGTON (AP) -- Rates on 30-year mortgages spiked this week as the tumult in financial markets continued to be felt in housing finance.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, up from 6.04 percent last week. The sharp increase pushed 30-year rates to the highest level since the week of Oct. 16.
http://biz.yahoo.com/ap/081030/mortgage_rates.html
That's some silly logic you're using. For one, your house might be depreciating or hard to sell if rates are at 10%. What's the point of investing in something that is illiquid? Why not wait until rates are at 6% then buying? Finally, why pay enormous amounts of interest for the privilege of having a 10% mortgage when rates eventually fall down to 6%? What the hell are you thinking?
400K 30YR Fixed mortgage @ 6%: $2,398.20 a month
300K 30YR Fixed mortgage @ 10%: $2,632.71 a month
Quote from nazzdack:
It's called "fear" and "credit risk".
It's called good for banks, borrow low lend high.
The rate won't matter if your in the right tax bracket, wink wink.