Where will the 30 year mortgage rates be in December 31st, 2009

[PANDA_IHB]

Where do you think the 30 year mortgage rates be on December 31st, 2009? I am going to guess somewhere between 6 - 8%.

 

[IrvineRenter_IHB]

You missed between 5%-6%, which would have been my vote, and you also missed 7%-8%.

 

[PANDA_IHB]

Sorry Irvine Renter : hahaha... I really did screw up this poll. You really think mortgage rates will still be between 5-6%? by end of this year? If that's the case... it is going to be one long journey until Woodbury homes drop to $250 ppsf levels.

 

[IrvineRenter_IHB]

Sorry Irvine Renter : hahaha... I really did screw up this poll. You really think mortgage rates will still be between 5-6%? by end of this year? If that's the case... it is going to be one long journey until Woodbury homes drop to $250 ppsf levels.

The rate of the decline depends on the rate of foreclosures. When the REO hits the market, prices will drop.

 

[awgee_IHB]

I dunno what they will be. Way too many variables. What I do know, or think I know, is that if they get over 5.50% within the next six months, Bernanke will go ape___ and buy as many 30 year and ten years as he thinks necessary to collapse rates. And I think he will be only moderately successful and any decrease in rates will be of very, very short duration and rates will not only head higher, but way higher than they would have without the Fed's "help." And then ... no matter what the Fed or Treasury Dept. do, rates will start screaming higher.

 

[PANDA_IHB]

I totally agree with you Awgee,

I think some people have this misconception that the FED has 100% control over the mortgage rates which is not correct. Awgee, sorry if i am derailing off the topic, but I remember you wrote a year ago that you think that we are currently 6 years into a 20 year commodity bull market. How did you come up with that number as i am in the belief that precious metal bull market that started in 2001 will be coming to an end real soon.

 

[awgee_IHB]

Stuff I read or have read. Sorry, but I do not remember specifics. Maybe you can google "commodities cycles."

 

[Sunshine_IHB]

You missed between 5%-6%, which would have been my vote, and you also missed 7%-8%.

Same here, 5-6.

 

[PANDA_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

 

[IrvineRenter_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

 

[usctrojanman29_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

A so-called second half recovery. haha 30-year mortgage rates will remain under 5% throughout 2009.

 

[graphrix_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

Because for the past year and half us bears, myself included, have thought that interest rates would be in the 7-8% range today. Boy... were we wrong about that. At least I have been right about foreclosures. Oh, and maybe the economy being in shambles not see since the great depression, just might be a reason why rates are down, and will stay down. I used to be in the higher interest rate party, but not any more. They will be below 7% for the next year and half. Better buy now before rates go up. Or... Interest rates have never been this low. Yes they were in 2004, and they are now, and they will be in the future.

 

[PANDA_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

Inflationary pressures. Do you notice how we experienced a nice 35% dead cat bounce since march but at the same time, the dollar is starting to weaken, and oil prices and things are starting to rise?

 

[IrvineRenter_IHB]

Because for the past year and half us bears, myself included, have thought that interest rates would be in the 7-8% range today. Boy... were we wrong about that. At least I have been right about foreclosures. Oh, and maybe the economy being in shambles not see since the great depression, just might be a reason why rates are down, and will stay down.

Yes, me too. I did not factor in the complete collapse of our economy into my thinking. Oops.

 

[PANDA_IHB]

Irvine Renter, I know that you mentioned that foreclosure is what will bring Woodbury's ppsf down to $250 from current $330 - $350 levels, but i believe it is going to be the combination of hyper-inflation, 8 - 10% mortgage rates, 12 - 15% unemployment, and a 3000 - 4000 DOW that will utlimately break the camel's back that will bring Woodbury's ppsf down to $250 ppsf. The small rise in Irvine home prices we have seen in the past couple of months will not last and will get crushed further going into second half of this year. (calm before the major storm).

Two years ago we were are all excited about your forecast that the median Irvine home prices will drop to $421,000, but how is one supposed to take advantage of these low prices when he or she is unemployeed and money will become extremely expensive and difficult to borrow in the next 12 - 24 months?

 

[awgee_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

China and Japan deciding not to buy treasuries.

 

[usctrojanman29_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

China and Japan deciding not to buy treasuries.

Then the treasury/Fed cranks the printing presses into overdrive.

 

[graphrix_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

China and Japan deciding not to buy treasuries.

I've been hearing that one for the past year and a half too. One week foreign buyers are weak for newly issued treasuries, and everyone comes out screaming "See! The Chinese aren't buying our bonds! We're all gonna die!" Then the next week, foreign buying is strong even though rates are lower, and everyone comes out saying "Well... due to the slight rise in the dollar and the convexity of the Euro to the Pound but the blah blah blah is why there was a strong foreign participation." IMO, they will keep buying our bonds, and they won't sell them either... because they are screwed if they do, and they know it. Gotta roll over the expiring bonds, whether you like the rate or not, and they do.

 

[qwerty_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

China and Japan deciding not to buy treasuries.

I've been hearing that one for the past year and a half too. One week foreign buyers are weak for newly issued treasuries, and everyone comes out screaming "See! The Chinese aren't buying our bonds! We're all gonna die!" Then the next week, foreign buying is strong even though rates are lower, and everyone comes out saying "Well... due to the slight rise in the dollar and the convexity of the Euro to the Pound but the blah blah blah is why there was a strong foreign participation." IMO, they will keep buying our bonds, and they won't sell them either... because they are screwed if they do, and they know it. Gotta roll over the expiring bonds, whether you like the rate or not, and they do.

My thoughts exactly - China not buying treasuries would completely devalue their current holdings, so they must continue to keep on buying.

 

[irvine_grad_IHB]

I am a little suprised that most believe that mortgage rates will remain low in the 3-5% range by Dec 31, 2009.

What would cause them to go up? The economy is in a shambles, so there is little or no chance of the FED raising the Federal Funds Rate. Investors worldwide are still buying dollars because it is still safer than other currencies, so we do not have to compete with other countries for dollars. The only pressure on mortgage interest rates is the risk premium that is basically controlled by the government now through the GSEs. So I ask again, what would cause mortgage interest rates to rise before the end of the year?

China and Japan deciding not to buy treasuries.

I've been hearing that one for the past year and a half too. One week foreign buyers are weak for newly issued treasuries, and everyone comes out screaming "See! The Chinese aren't buying our bonds! We're all gonna die!" Then the next week, foreign buying is strong even though rates are lower, and everyone comes out saying "Well... due to the slight rise in the dollar and the convexity of the Euro to the Pound but the blah blah blah is why there was a strong foreign participation." IMO, they will keep buying our bonds, and they won't sell them either... because they are screwed if they do, and they know it. Gotta roll over the expiring bonds, whether you like the rate or not, and they do.

My thoughts exactly - China not buying treasuries would completely devalue their current holdings, so they must continue to keep on buying.

Isn't this why China is increasing their stockpile of precious metals? To de-couple the yuan from the $$$$$?