“The average U.S. rate on a 30-year fixed mortgage rose this week, thwarting Federal Reserve efforts to cut borrowing costs, on investor concern the government will increase spending. The fixed rate increased to 5.25 percent from 5.10 percent last week…The 15-year fixed rate jumped to 4.92 percent from 4.8 percent.”
Fixed Mortgage Rate Rises to 5.25%, Freddie Mac Says [Bloomberg]

28 thoughts on “JustQuotes: A Safe Place To Discuss And Debate Mortgage Rates”
  1. Looks like rates on Jumbo (at least Wells site) have dropped to around 6.6%. The past few weeks I have checked they seem to hover between 7.5% and 8.5% so hopefully they will keep falling? May be interesting if this lines up with gov $ credits and such. Could be perfect timing for those that wan’t to get in on a great property. disc: not a realtor – just sayin timing may be right.

  2. Dude – Exactly what I have watched, heard and thought was happening. This is why I was shocked to see the Jumbo drop today on Wells site.
    I agree once Geithner starts the presses we are all in for a wild inflation ride.
    I do however think there may be a chance just before the presses churn that Obama may try to get the banks to lend, drop rates – essentially help float the ego he sold us all.. may be a small window but I think it could happen.
    Someone on here mentioned a W recovery – I agree and believe this is about to happen.

  3. Inflation? What about deflation! Do you know how much monetary stimulus it will take to offset the fall off in velocity and plummeting GDP? Inflation is the last last thing we should be worried about. No one wants to buy at Infinity, Millennium or other nice units not because we can’t afford it but becuase prices are going down. That is a deflationary spiral that needs to be broken before prices stabilize. No amount of tax credits or low mortgage rates can offset the deflationary psychology that comes with fear of job loss and fear of losing principle.

  4. Looks like rates on Jumbo (at least Wells site) have dropped to around 6.6%.
    I just checked Chase and they are in the same range:
    6.625% (30 yr fixed, $1 million condo, 20% down, 1.375 points).

  5. Hijack is right. In any case, GWTF’s scenario could happen. I happen to believe the new administration will go the world, hat in hand for trillions, and get the cold shoulder. Either deflation continues, rates jump across the board and GD2 starts anyway, or any stimulus passed isn’t large enough to move the needle.
    In any case, it won’t matter over the long run. You can pay $750K for an Infinity 2-bedroom financed with a 6% mortgage today. I’ll buy a similar unit in a few years for $600K with an 8% mortgage. And I’ll still have a lower payment. Oh – and I’ll be able to refi when rates fall.

  6. speaking of jumbo rates, which bank sucks the worst? I cannot stand these people!
    “If you’re so rich, how come you’re not smart?”

  7. “No one wants to buy at Infinity, Millennium or other nice units not because we can’t afford it but becuase prices are going down.”
    No one? How come every time this rather bearish website publishes sales numbers it shows that people actually ARE buying at the buildings you mentioned?

  8. Dude as with everything, the timing would have to be perfect and it’s all in the details.
    Let’s assume that by the time you buy the increased conforming is no longer available, nor the gov incentives.
    For the sake of conversation let’s say we don’t even factor in gov incentives.
    If I pay 750k and 6% and got in on the increased conforming up to 729k (which I did).
    You get the unit for 600k paying 8% but only up to 417k than have to put 183k on a second at that point most likely around 11% or higher
    than your payments would be around $306 more per month than mine. Unless you pay more down on the second in cash = I may have paid or borrowed in this case $150k more than you, but you have to bring 153k more to the table than I did initially if 20% down is still required. I am more comfortable right now using more of the banks money, than my money to leverage a place.
    I am not sure the new 625k conforming is temp, if it is perm obviously you would be right re: who has higher payments but you would only beat my monthly mortgage by $94.
    If you look at the overall savings on the unit, clearly you would be in a much better position IF you can sell for = to what I can in the future or IF you can refi when rates go down.

  9. For the sake of conversation let’s say we don’t even factor in gov incentives.
    Good idea. Dude would be paying around $2k+ less per year in taxes thanks to Prop. 13 and locking in a lower basis. That, and he would have more interest deductions early on…

  10. GWTF,
    Assuming your numbers are correct, Dude would be paying $3672 ($306*12) more a year. He paid $150k less to buy the property though.
    I can live with paying ~$4k more a year but buying a property for $150k less. The breakeven on that is more than 30 years, which means Dude will come out ahead. Not to mention, if he needs to sell the place, he’s more likely not to sell at a loss.

  11. Yes Prop 13 is obviously a big factor in it all
    unless I have my house re-appraised for less and file for tax reduction which I would use his for a comp if he paid less.

  12. Not Dude – yes, that is why I stated:
    “If you look at the overall savings on the unit, clearly you would be in a much better position IF you can sell for = to what I can in the future or IF you can refi when rates go down.”
    But in the intermin it is a fact that unless Dude brings more money to the table he would be paying $306 more per month. What Dude stated is that his payments would be less than mine, which in certain cases as I have shown would not be true.
    Each person obviously needs to see what works best for them.. and what risk they are willing to take.. I personally want the larger tax break right now – no actually need it.

  13. $750K purchase with 20% down (I don’t believe you can go over 80% LTV anymore) on a 30-year fixed jumbo at 7%. P&I = $3,991/month. Rate quote is from bankrate.com via Bloomberg.
    Now, the going rate for resales in Soma is already around $650 psf on average. So you could argue the Infinity is already overpriced vs. market because emotional types are willing to overpay for that “new condo smell,” as sfrob puts it.
    Now, let’s say that the secondary market falls another 10%, which is hardly a doomsday scenario, and resales at the Infinity in a year or two are going for $585 psf. That puts the same 2-bedroom condo at $600K.
    $600K purchase, with 20% down, at a 9% mortgage is a monthly P&I of $3,862/month. Rates went up only 2%, market fell only 10%, and I’m still better off. Not to mention my property taxes are lower in perpetuity, and I have LESS of my own money at risk because my 20% down payment was only $120K instead of $150K.
    But I guess I won’t enjoy the new condo smell…

  14. Dude – we are essentially saying the same thing but using different variables.
    I am just pointint out that your scenario works only IF you can get the increased conforming. Thing is in 2 years given that is based on the median it may fall and you may need to put a bulk of money on a 2nd much higher rate mortgage. I can get my property revalued and pay lower taxes. and you would only have less of your own money at risk if you can get the increased conforming or you will have to actually bring more to the table than I did or like I said pay an est. $306 more per month. Plus I get a larger tax break, not much but some.
    I am not disagreeing with you just pointing out that the details do make a difference for each person, each scenario.
    NO matter the details I do agree however that you will obviously make out better long term in selling.

  15. GWTF,
    My bad for missing your statement on the price savings on the unit.
    If you were only pointing out that Dude could be paying more a month, then point taken. But you are missing the greater point of my post. I don’t think anybody minds paying $4k more a year to buy a place for $150k less.

  16. NotDute – exactly what I was pointing out – that Dude could be paying more per month. Only pointing that out as he stated he would be paying less per month vs. just stating he would save more overall.
    I do agree the 4k more per year is worth saving 150k overall.
    For some however that may put them over the edge on the Debt to income so I guess it depends on how bad you want the place vs. being smart about it.
    It also depends on the Infinity offering that type of reduction which is no guarantee, in particular on a unit one want’s vs. buying the left overs.

  17. The obvious interplay here is how much prices fall vs. how much rates rise. Neither can be predicted with material accuracy.
    However, I think few, at this point, would disagree with the assumptions that 1) prices in San Francisco are falling, and there’s no logical reason to assume they stop falling anytime soon; and 2) rates are being held low by government intervention, and can only trend up from here.
    Not to get into a discussion on duration and convexity of leveraged assets, but if you think the rise in rates will overshoot the fall in prices, then lock in cheap money today. I just don’t share that belief. Oh, and regarding Infinity, I wouldn’t buy anthing from the sales office anyway. I’d wait for resales (which will mostly be short sales) to hit the market in a year or two.

  18. Also factor in how much Dude paid in the two years in rent during those two years. Never mind about tax deductions. GWTF’s amortized payments count will ultimately count against the sale. If he actually plans to buy in the same building, Dude’s rent payments will count for nothing. Factor in the negative opportunity cost.

  19. Dude, there is a 2 bedroom resale going now, it look’s like it has dropped a lot in price all ready. Maybe you can talk them down, get a good int rate, put useless rent money to good use, have a decent prop tax bill, and take advantage of the increased conforming as well as the 15k tax credit. This may be your opportunity.

  20. Great point, fluj! I overlooked how many tens of thousands of dollars I’ve saved in renting that would have otherwise been imploded by the bubble. You have to live somewhere, and you either rent the money from the bank, or you rent the property from the person renting the money from the bank. We’re all renting unless we pay cash. Which form of renting has been a better capital preservation scenario during the past few years, if you had to move today?
    Which brings me to my final point here: I would never buy a newer condo for materially more per month that I can rent an IDENTICAL unit for, tax-adjusted, of course, and with 20% down on a 30-year fixed. Personal rule for me. Unless I expected appreciation, of course, which I don’t for at least another 2-3 years. The only “opportunity cost” I’ve lost is not having paid interest on depreciation to paint a wall.
    But thanks for recommending the resale, GWTF. I’ll pass this time. I have a feeling many better opportunities lie ahead. Let’s wait a few months and revisit where rates and prices go.

  21. Fine, don’t count it then. It’s make believe anyway. Hypothetically though, your two years of rent and GWTF’s two years of amortized payments are not nothing. Everybody always wants to bring up opportunity cost when something is dissected. Funny how that works.

  22. I think what fluj was saying is that you also have to factor in the opportunity costs of GWF’s down payment which Dude has avoided — i.e. the 4% or so Dude could get (and perhaps is getting) by sticking that down payment in a CD while he waits to buy. Makes the numbers come out even more favorably for Dude.

  23. Not what I’m saying at all, Trip.
    Hey, Dude feels that he has saved money, fine. Follow me. Hypothetically say he KNOWS in his heart of hearts he wants be in this exact same building in two years time. I’ll allow you to begin right now, and forget about the beatings most people (but no one on Socketsite) took in markets over the past year or so. Go ahead. Factor in the money Dude saved by smartly being in a CD. But also factor in the money Dude spent on rent during that two year period versus the money GWTF has knocked off his mortgage.
    Why is that not a viable metric to you guys? If Dude KNOWS right now that he wants to be in the same exact building?

  24. I suppose unless we knew what Dude was paying for rent it would be hard to compare the actual savings. Dude sounds like a smart one so I give the benefit of the doubt the rent vs. buy analysis was crunched for Dudes specific situation. Again I was not saying Dude is wrong just stating that in the example Dude provided my mortgage would not be more in ALL cases.
    Dude – out of curiosity do you have to pay extra for parking?

  25. Gotcha — I see what you’re saying. Yes, one would credit GWF for the principal he had paid down on his loan for the two years. But on a 30-year mortgage that is not much. Add you also have to factor in property taxes GWF pays (deductible) and HOAs (not deductible) — costs avoided by renting.
    Bottom line is it is not even a close call in the rent vs. loan analysis at prevailing rents and selling prices unless one assumes substantial appreciation, and we’re looking at just the opposite. But don’t get me wrong — there are a thousand non-financial reasons to buy a place, and it sounds like GWF is very happy with his home, and that’s what matters most.

  26. I still say it is all in the details.
    With out giving away the exact unit I am in I know I would have to pay a min. of $5500-$6500 based on going rates I see in the market currently for 3/3 to rent what I have. Dude came up with $3,991 as my estimated mortgage cost using 7% although I have 6% 30 yr fixed. So as you can see buying was best for me. If I take the savings for buying vs. renting in my case, add on the prop tax and mortgage deduction savings, and say stash it for 2 years at 4% I may not save the 150k but it is not as far off as you think.
    Also keep in mind Dude is ok buying resale, I am not; I only buy new so there is a bit of value in that for me. I am willing to pay more for a new unit; not smart but it is what I prefer. Saving what Dude can on a resale is something I never expect to get on my end.

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