Mortgage Rates to go up by week's end? . .

[ashedfc]

Absolutely True,
The Current Housing Bubble is "EPIC" in nature; & is not supported by increase in household income. It has to burst someday; & trust me That day is not far away.
My guess is "its going to start from the downtown Condo market & spillover to general housing". As investors gets burnt in their condo investments, they become seller of wherever they have profit, that will cause more sellers than buyers & its gets nasty from there... I have been in consultation with several professionals in the industry & many of them share this opinion.

Its always better to sell when the party is still going on: One may miss the little bit of upside (whatever left) but will be protected from a whole lot of downside... expected to happen in the future.

The early 1990's housing scenario is coming sometime in the very near future... (maybe 2013-14 & onwards)

[ashedfc]

The government does not directly set the rates for its bonds, that is not the way it works. They are effectively sold at auction, so the final rate is effectively set by the market. Where the government messes this up is that it tells the banks that they can borrow a virtually unlimited amount of money at say 0.5%. The bank then looks around and sees that it can get 1% for government bonds, so it takes the loan, and loans the money right back, and pockets a 0.5% profit for no effort whatsoever.

This is certainly not what the government intended. Banks have not necessarily lent out more money, but seen an opportunity for an easy, guaranteed return on borrowed money.

But I do not blame the banks, they are simply taking advantage of the current environment, and doing what serves their interests. We all do it all the time. This is the basic reason why capitalism works, we each get to use our money as we see fit. The banks are no different.

Excellent explanation..
Here's the Govt Bonds & Banks relationship explained



(its a road to nowhere situation - they are only concerned about saving the banks & gutting the economy by high inflation which is guaranteed & baked in the cake for our future)

[croman7]

Did rates go up?

[Zonny]

I'm glad we didn't go by what we were approved to spend when we bought our house (our first). Just because they told us we were approved for $250K didn't mean that's what we needed to spend. No big screen TVs, etc. in this house. We generally do one major thing a year to the house, whether it's new furniture, new roof, oil tank, etc. We have no other debt.

We have a variable rate now, and have been in our house for about nine years. We have a higher payment than we need to because it will make us happy to be mortgage-free, and in theory it can be paid off in another eight as long as prime doesn't fly up significantly.

[ashedfc]

as long as prime doesn't fly up significantly.

Good for you...
If Prime rate goes up & starts flying; than for sure you will see much better economic conditions; better job opportunities; higher wages; etc.etc leading to higher affordability (as it happened in the 1970's decade to 1970-80)

[MortgageQueen]

Did rates go up?

No, they haven't. They were flirting with it quite seriously to the point that several Lenders sent us brokers warnings, but so far, so good. Maybe things will staedy out. . .
I will post any developments.
Prime rates are NOT affected. . .so variable rates are safe.

[MortgageQueen]

UPDATE

Rates are to go up by tomorrow at some major banks tomorrow.

The good news. . . .is it's only by 1 point. (i.e. could be 5.2 instead of 5.1)

[croman7]

UPDATE

Rates are to go up by tomorrow at some major banks tomorrow.

The good news. . . .is it's only by 1 point. (i.e. could be 5.2 instead of 5.1)

thx for the update!

[Shwa Girl]

Good for you...
If Prime rate goes up & starts flying; than for sure you will see much better economic conditions; better job opportunities; higher wages; etc.etc leading to higher affordability (as it happened in the 1970's decade to 1970-80)

Aaaah. Dreaming of back in the day.

We figure it doesn't matter if mortgage rates go up a bit.

We want to make sure our emergency fund is funded, that we have a Plan B for job loss and that we add to principal of our mortgage, aggressively.

Has worked for us for the past few years. So we will keep doing this.

[gourmetsue]

Very interesting thread! As a new home owner I find this discussion timely and fascinating. I am always thankful that our parents raised us to work for things that we wanted, not just rely on large credit lines or loans to furnish our house, pay our bills or just live.

[MortgageQueen]

Aaaah. Dreaming of back in the day.

We figure it doesn't matter if mortgage rates go up a bit.

We want to make sure our emergency fund is funded, that we have a Plan B for job loss and that we add to principal of our mortgage, aggressively.

Has worked for us for the past few years. So we will keep doing this.

Well, you are right ShwaGirl. It won't make a huge difference. EXCEPT if you are just getting your mortgage now for a 5 yr. fixed rate (or even 10)

And considering the roller coaster in the "shwa" having your emergency fund is important.
You may find it interesting to know that home values were Up in the shwa last month. . so that's nice news.

[MortgageQueen]

Very interesting thread! As a new home owner I find this discussion timely and fascinating. I am always thankful that our parents raised us to work for things that we wanted, not just rely on large credit lines or loans to furnish our house, pay our bills or just live.

Aaaaaahhhh. . .if only all canadians felt that way, eh?

[kanewtz]

What about Prime? Is that rising any time soon?

[MortgageQueen]

What about Prime? Is that rising any time soon?

The "Prediction" is not until close to 2013. . . but that is just what economists predict based on the economy. Usually, they're fairly accurate but it's not carved in stone.
My guess is you can count on 6 more months at the least. . . barring any large world events

[ashedfc]

The "Prediction" is not until close to 2013. . . but that is just what economists predict based on the economy. Usually, they're fairly accurate but it's not carved in stone.
My guess is you can count on 6 more months at the least. . . barring any large world events

This (Graph of 220years http://jugglingdynamite.com/wp-conte...since-1790.png ) will give you an broad picture on the current interest rate trend..as of now its still downwards.. So there are only 2 choices
1. Economy stays bad- interest rates stays low (or goes lower)..
2. Economy improves - (high inflation) resulting in high interest rates ..

Once the trend reverses, it will be a big concern for several homeowners, who are at the edge.. Its a trend 30years in the making & the reversal will be very painful.. People here are not used to 10% interest rate on mortgage anymore (they have all gotten addicted to cheap credit).

Though there are some countries, where currently we have 10% rates on mortgages in India, but there the economy is growing 7% & average wages just increased 11.7% (news came yesterday)