Any Educated Guesses to where 30 Year Fixed Mortgage Rates will be in 2009/2010?

PANDA DREAMING OF IRVINE_IHB

PANDA DREAMING OF IRVINE_IHB

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From Jan 1, 2008 til now we went from 5.3% to 6.3% for a 30 year Fixed Mortgage rate. Does anyone have any educated guesses to where 30 Fixed Mortgages Rates will be at in 2009 and 2010. I have a feeling it is going to be much higher than 6.3% but what to hear what guys think? It would be really nice to see another 20% drop in home prices in Irvine, but it would really suck if mortgage rates start climbing form 6.3% - 8% in the next two years? Any thought?
 
If I knew where they would be next week I'd be insanely wealthy.



Suffice to say they will be higher than they are now. Which is bad for RE prices.
 
you easily could be right, awgee. When they had gone down from 17 1/2% or so to 11%,

I had a realtor tell me, all giddy with happiness because they had gone so low, that

interest rates would NEVER go below 10%. I said never was an awfully long time, but

I myself thought that they would never go below 7%, which is the lowest I had

experienced.



I think that if there was any honesty built into the system they would be at 8 or 9 right

now. The powers that be will allow honesty only when all other options have been

exhausted, and they have no choice.



Signs of the times. We went to the mall and the Hallmark store was going out of

business. When we were there 2 weeks ago, it was fully stocked with no indication

of any trouble. The Verizon store was packed. (We were there to get the hub's

phone replaced because it kept turning itself off. Mission accomplished, no hassle

at all.) Other than that, not too many shoppers, but really not fewer than usual.

There aren't that many this time of year. A few extra in the men's depts with people

buying shirts for dad.



this is in Brevard, space coast Fla.
 
[quote author="awgee" date=1213499632]10% to 15% in 2010</blockquote>


Holy Crap, Awgee are you SERIOUS???? DUDE, this was exactly what i was afraid of.



If mortgage rates will go up to 10% to 15%, I think we will see declines that is going to be much greater than 20% in Irvine? For people who are putting down 20% how are they going to afford the mortgage payments?



There is going to be a serious blood bath in the Housing Market if what you are telling me is right?

Awgee, can you tell me why you are thinking this number in 2010. Does it have to do with Bernanke continuing to cut rates and inflation kicking in at full speed from now unil 2010? I know from 1972 - 1981, mortgage rates went from 7.4% to 16.6%. Do you think we are in a similar time period right now?
 
in 2009 we will be higher single digits. 2010 we will be lower double digits.



That's for 30 year fixed conforming.



Bank failures and inflation alone will get us there.
 
DUDE, Panda is POUTING AND CRYING...



Man, I should of bought in Jan 2008 when 30 fixed rates are at 5.3% I guess we will never see these numbers again!!! This is going to be a double edged sword. Home prices will come down but we will have to pay higher mortgages rates. Outcome will be that our monthly payments will be the same.



"IT IS TIME FOR PANDA TO SERIOUSLY LOAD UP ON EVEN MORE GOLD, SILVER, AND OIL. It doesn't look good for the U.S. economy and the real estate market. Fasten your seat belts and hang on to your seat.



In a more serious note, I think we are going to see declines accelerating at a faster rate than what we have seen in 2006, 2007, and 2008. I think that many of us are still in denial that our country is in recession right now.
 
Don't worry, Panda, if rates rise it will just push prices down further. They're going to rent equivalence.



However, I don't think it's possible for rates to get above 8% or so. If they get to those levels almost everybody with an ARM from the past five years will be driven from their houses by the adjustments. The flood of bankruptcies, foreclosures, and bank failures will in turn drive us into a deep recession, which will kill loan demand and push rates back down.



If anybody really think rates will go up that much they should be maximizing their mortgages and shorting the long-term bond because if rates go to the double digits anybody owing money on a long-term basis is going to be RICHRICHRICH if they haven't invested the money in something interest-sensitive.
 
Well, it will interesting to see. I originally thought that $800,000 homes in Irvine right now would get down to around to $650,000. If mortgage rates creap up 10% or higher, I'm thinking that $800,000 house now will get down to $560,000 range. It will be interesting to see Quail Hills, Northwood II, and Woodbury in 2009 and 2010. Most of the 5 years ARMS will reset for QH in 2009, and WB and NW II in 2010. When the five year ARMS reset in Woodbury in 2010 at the mortgage rates are in 10 - 12%, my heart goes out to all the Woodbury home owners. Before I would laugh at the knife catchers who own at Northwood II and Woodbury, but now it is not a laughing matter. I honestly feel really really bad for these home owners. It is going to look really UGLY.
 
Panda: 7% to 10% should knock prices down by almost 25% (from the equilibrium price for 7%) so if you're expecting 650K now at 10% is would be about 500K and at 12% it would be about 420K. Yeah, that would be beyond ugly for current owners who bought around 800K!



lawyerliz: Yeah, it's scary betting against the long-term bond. I'm trying to think of a safer way to place that bet and coming up blank. Still, the fact that few do it shows few are sure of, or even highly confident, of (relatively) high interest rates.
 
I'll guess 11% (maybe even 12%) on a 30 yr fixed conforming rate.



That's what I paid in the early 90's when I bought my first place with perfect credit and no debt. It was an FHA mortgage, 3% down.
 
Panda



Dejavu... <a href="http://www.irvinehousingblog.com/forums/viewthread/2165/">Another thread on interest rates</a>



I for one am all for higher interest rates. While it will kill my equity in my current home, that'll mean lower prices for newer homes...
 
God will not listen.



Gee, maybe we'll get 10% on our money when it comes time to retire, like

those retirees who got fabulous returns in the mid 80s to early 90s. Not that

it's that mucho money. But still. . .
 
Lets see if I can still operate my 17b correctly



360 months

$3000 a month

FV=0



At 6%, you can borrow $500,374.84

At 8%, you can borrow $408,850.48

At 10%, you can borrow $341,852.46



Your payment for $500K @ 10% is 4,391.15.



Lets recap:



- The stated income loans are gone.



- You have to qualify and prove you can make the payment (which few could, as evidenced by the use of "affordialiby" mortgages).



- Interest rates are going up.



- With the execption of some shit condos in shit neighborhoods, you can rent nice places for 60% or less of the post tax cost of ownership, which convenently knocks out cash flow investors (they tend to like things that are positive cash flow), so you can scratch the demand side.



- Banks and thier REO are now the market, and they are starting to get agressive on pricing as properties stack up like Lucy and Ethyl on the candy wrapping line.



Liz,



God is listening. His answer is usually "Don't be a fool, and if you're going to be a fool, I'm not gonna bail your ass out."
 
If are are waiting to buy a home, you actually want a 20% interest rate.



If interest rates were 20%, home prices would HAVE to fall to a level where income could qualify at 20% interest rate.



Therefore you get the home much cheaper (loan amount smaller).



Then, when rates drop again, you can refi, and WALLAH - you have a small loan amount with a low interest rate!
 
That's awesome, No_Vas



panda, do not worry, be happy. Interest rate increases are your friend as a renter. You will be able to earn more interest on your savings for the down payment. Prices matter MUCH more than interest rates. Also interest rates constantly fluctuate, but your purchase price will never change.



Example: purchase now 750k home with 150k down payment. 600k loan. 80% LTV assume 6.5% 30 yr fixed

monthly P&I;payment = $3,792. Taxes (assume 1.25% rate) = $781 a month

<strong>Total payment (excluding mello roos or HOA) = $4,573</strong>



purchase same home later at 600k (Only 20% discount) with 150k down. 75% LTV assume 9.5% 30 yr fixed.

monthly P&I;payment = $3,784. Taxes (assume 1.25% rate) = $625 a month

<strong>Total payment (excluding mello roos or HOA) = $4,409</strong>



You see interest rates can increase 50% from where they are now, and your total monthly payments will still be lower! I don't think rates will make it to double digits, but I do think th 30 year fixed rate will eclipse 8% by 2010.
 
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