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Category Archive: ‘Interest Rates/Loan Limits’

National Housing Policy

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I saw these questions from Ed DeMarco on Twitter. My answers:

1. Have the M.I.D. apply towards primary residence only (not second homes), and lower from $1,000,000 to $500,000.  Those buying in hopes of a bigger write off will still buy a house, and take the partial benefit – and be in it for the appreciation and to raise a family (make wifey happy).

2.  Have the mortgage interest deduction be in effect for the first ten years of ownership only.  It would encourage borrowers to pay off mortgages in the ten years, and not refinance every year.

3.  Require that only the buyers can pay for mortgage insurance (sellers can pay in full now).

4.  Redirect the disadvantaged folks to subsidized rentals until they aren’t disadvantaged. Only stable, secure, affluent people should buy a house – it’s too late for the rest, unless they drive to the suburbs/outer edge of town.

5.  There are several loan programs available to help the disadvantaged already.  NACA is still around, helping buyers purchase with no down payment and no closing costs (H/T daytrip):

6.  Lower the capital-gains tax for 1-2 years to incentivize those reluctant-but-motivated possible sellers to unload a rental property or two.  Cut federal rate to 10% for the first year (currently 20%), and then back to 15% in the second year.  The crotchety old guys still won’t sell, so there won’t be a flood.  But more inventory = more sales while stabilizing prices.

7.  Keep Fannie/Freddie the way they are for now. If they can keep operating in the black, let’s allow the mortgage industry to enjoy the fluidity. I attended a seminar today on the new loan disclosures coming on October 3rd, and it is clear that Fannie/Freddie will be extremely strict on compliance. It doesn’t mean tougher credit, it means the mortgage industry needs to submit the cleanest loan packages ever – which is good for the taxpayers.

8.  The new compliance crunch will virtually eliminate mortgage brokers – wholesale lenders won’t want to take a chance on them. Yes, we still have room for you over here to be a realtor – there’s only 11,000 of us chasing 3,500 sales each month.

9.  Encourage a private jumbo-MBS market without subsidizing it.  Eventually, a private MBS marketplace could help shift the burden from Fannie/Freddie.

10. Run a tight ship.  We can handle it.

The powers-that-be have made some great moves to get us this far, now bow out gracefully and let free enterprise take care of the rest.

Posted by on Aug 20, 2015 in Bailout, Housing Tax Credit, Interest Rates/Loan Limits, Loan Mods, Local Government, Mortgage News, Mortgage Qualifying | 0 comments

Fed Move?

july 14 rates

The President of the Federal Reserve Bank of Kansas City thinks “it’s time” for the U.S. central bank to raise short-term interest rates to reflect solid improvements in the economy.

The current level of near zero short-term rates, set at emergency levels to deal with deep economic problems, “do not seem needed anymore,” Ms. George said. “We should now be beginning to think about a rise in interest rates,” the official told a gathering on agricultural matters held at her bank. “You have to have some dose of courage” in your forecast and be willing to act, even when the future is uncertain, Ms. George said.

Link to WSJ article here.

Austan isn’t so sure:

Posted by on Jul 15, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 2 comments

Summer Rates

loan rates

We’ve been enjoying a statistical exuberance that is somewhat misguided.

The latest Case-Shiller Index was the March reading, which includes sales data from the previous two months too.  Our recent local data has been looking strong as well, with both April and May sales and prices higher year-over-year.

But rates were lower when those buying decisions were made.  Rates are heading north now, and are higher than they have been all year:

June rates

The reports of good news will keep coming all month, and sellers will stay optimistic – and be reluctant to lower their price in the midst of the euphoria.  But the prime spring selling season is complete, and the summer sales should be impacted if rates keep rising.

Back in 2013 when rates started rising, some buyers rushed to purchase – but that was 10% to 20% ago, price-wise. They are going to be more tempted to wait it out this time.

Get Good Help!

Posted by on Jun 3, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market, Spring Kick | 1 comment

Rate Hike Needed?

Shiller takes a shot at Californians in the video below:

The U.S. Federal Reserve should consider lifting interest rates sooner rather than later to tackle speculative bubbles in the housing and stock markets, Nobel Prize-winning economist Robert Shiller told CNBC on Monday.

Shiller said that some parts of the U.S. — such as San Francisco and California — were in “bubble territory,” with house prices growing rapidly.

“If I was asked to testify before them (the Fed) I might reconsider, but there is a tendency for central banks to ignore speculative bubbles until it’s too late,” Shiller said, talking about the need for higher interest rates.

“It may already be too late. Stock markets in the U.S. are quite high and prices in the real estate market are getting high.”

“I call this the ‘new normal’ boom – it’s a funny boom in asset prices because it’s driven not by the usual exuberance but by an anxiety,” said Shiller.

“This is an anxiety driven world – the whole world is driven by anxiety. It is anxiety about the aftermath of the global financial crisis, it’s anxiety about inequality and about computers replacing jobs,” he added.

Posted by on Jun 1, 2015 in Interest Rates/Loan Limits | 4 comments

NSDCC Sales History

Last week we saw the recent NSDCC sales history – how does it compare to previous years?

Here are the sales stats from the first four months of each year, going back to the beginning of the 2-out-of-5-year capital-gains tax exclusion – which helped trigger the ensuing bubble:

# of Sales
Median SP
April 30-Yr Mortgage Rate

In spite of all the excuses – low supply, high prices, tough credit, etc. – this year’s sales count is the second highest of the last ten years.

Want to know the direction of the market? Watch the sales count – it reflects the changing combination of low supply, prices, tough credit, and mortgage rates. We have it good here!

Click for more local history:

Posted by on May 19, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market, North County Coastal, Sales and Price Check | 14 comments

Are Higher Rates A Problem?

mortgage rate history

We have significant turbulence in the bond market this week, and most think it can’t get any worse. The jobs report tomorrow will probably dictate the next movement, but for now the 30-year mortgage rates are around 4%.

If rates go above 4%, is it nervous time?

Not really – rates were in the fours virtually all of last year.  We’ve been spoiled the last few months!

Finding a worthy house to buy is the problem.

Posted by on May 7, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 2 comments


may rates

Mortgage rates are known to rise without much notice – if any!  From MND:

Mortgage rates are having a rough couple of weeks.  Yesterday saw rates approach the previous 2015 highs set on March 6th.  Today’s rates moved slightly higher still, setting a new 2015 high.

The average lender is now quoting conventional 30yr fixed rates of 4.0% on top tier scenarios, though 3.875% is still available in some cases.  This is a substantial increase from the 3.625% rates seen just a few short weeks ago.

The last time rates spiked (June 2013), it spurred the market as buyers grabbed what they could while rates were still under 4%.  But now that prices are more than 10% higher, the impact might go the other way.

Posted by on May 6, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market | 0 comments

NSDCC April Sales

rates higher

The NSDCC sales count for April exceeded last year’s number, and prices were slightly higher too.  But the rate of price change has slowed considerably, and if rates bump significantly higher, we should see the market stall out.

NSDCC Sales for April

# of Sales
Median SP
Avg $/sf
% chg

In the short-term, there is virtually no chance of prices coming down, because sellers won’t believe it.  Their motivation is already suspect, and when confronted with the choice of lowering their price or waiting longer, virtually all NSDCC sellers will opt for the latter.  It will only be after months and months of trying that they might consider that price is the problem.

This guy doesn’t think the Fed will raise rates in September, and he has been very accurate with his recent predictions. If rates stay around 4% or lower, we should see more soft landing/shambling along, with occasional bidding wars to keep everyone’s interest.

Posted by on May 5, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market, Sales and Price Check | 1 comment