Whodathunkit

From CNBC:

Rising Mortgage Rates Cause ‘Rush to ARMs’

After hovering around record lows for the past few years, mortgage rates are rising dramatically. That has consumers not only shopping more but also considering adjustable rate mortgages, which offer lower rates and lower monthly payments.

These ARMs, many requiring interest payments only, were popular during the latest housing boom but quickly fell out of favor when safer, fixed-rate loan rates fell to record lows. ARMs accounted for 36 percent of mortgages in 2006 but just 4.5 percent today, according to Lender Processing Services.

The shift to ARMs is not visible on a grand scale yet, but it is beginning.

The average contract rate on the 30-year fixed rate rose to 4.46 percent from 4.17 percent, the Mortgage Bankers Association said Wednesday. At the beginning of May, rates were as low as 3.5 percent. Concern that the Federal Reserve will begin to pull back on its purchases of mortgage-backed bonds, which pushed rates so low in the first place, caused the most recent spike.

The combination of sharply higher home prices and rising rates is squeezing buyers who are already facing tighter underwriting standards. In order to qualify for loans, they must fit into strict debt-to-income calculations, and those calculations change with every increase in mortgage rates.

“I think you’re seeing much more intense shopping where people are comparing rates between lenders, but also looking at different less conventional products,” said Glenn Kelman, CEO of Redfin. “They’re getting teaser rates, they’re buying it down, they’re trying different things to try to get back to the rate they saw last week.”

Some buyers are also being forced into adjustable rate loans in order to save deals that may have blown up in the past few weeks due to the rise in rates.

“Funny, people are rushing into higher-risk loans to save deals as rates spike. What happens in five years when their rate starts adjusting upward 2 percent per year? They blow up!” said Mark Hanson, a California-based mortgage and housing analyst.

Rising rates will push some into riskier, adjustable-rate products, “whereas others will view rising rates as a sign that they need to lock in to a 30-year fixed now before rates move higher,” said Craig Strent, CEO of Maryland-based Apex Home Loans.

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80 Responses to Whodathunkit

  1. JJ says:

    I am always 1!

  2. Brian says:

    one of what?

  3. Painhrtz - Disobey! says:

    most STDs

  4. xolepa says:

    Here we go again.

  5. Painhrtz - Disobey! says:

    X get a sense of humor JJ has one

  6. xolepa says:

    When Ronald Reagan made that retort, he had a smirk on his face. You just can’t see mine.

  7. xolepa says:

    Man, we are slow today. And now for some Hunterdon County news:

    http://www.nj.com/hunterdon-county-democrat/index.ssf/2013/06/franklin_police_officer_who_cr.html#/0. Read the comments.

    In this county, your name gets around fast. My guess: cop was eating donuts while talking on his cell phone.

  8. Juice Box says:

    Obama today while in Africa pretty much confirmed Snowden has more info that could be damaging.

    I wonder if Snowden has info on say perhaps some illegal wiretapping of conversations from the press and political adversaries?

    History does Rhyme, during his re-election campaign in 1972 Nixon ordered wiretaps of reporters and government employees to discover the source of the news leaks during his administration in addition to bugging the DNC etc.

    It is not out of the realm of the possible, that the same occurred under Obama, and before anyone here flys of the handle this is not an indictment it is just a discussion.

    http://www.cbsnews.com/8301-202_162-57591281/obama-concerned-edward-snowden-could-leak-more/

  9. JJ says:

    WASHINGTON (MarketWatch) — Following news that the Federal Reserve could start tapering bond purchases this year, the average rate for the 30-year fixed-rate mortgage soared to 4.46% in the week ending June 27 – hitting the highest rate since July 2011 — up from 3.93% in the prior week, Freddie Mac said Thursday in its weekly report. That gain of 53 basis points is the largest weekly change since 1987. A year ago, the 30-year rate averaged 3.66%.

    There has to be some folks who went to contract in last three weeks who have not yet locked in a rate whose blood is boiling.

  10. Juice Box says:

    re#7 – and no seat-belt. That is at least three tickets.

  11. Painhrtz - Disobey! says:

    I think Edward the Screwed has info junk on both parties to ruin them all. That is why they are both screaming for his head. There was a reason Hoover stayed in power for so long he was an equal opportunity blackmailer, snowden is using it to save his own skin, probably miscalculated the indifference of the American public in demanding answers.

  12. JJ says:

    According to the US Census about 70 percent of homes have a mortgage and 30 percent do not.

    Just to put the rising mortgage rates into perspective.

  13. Juice Box says:

    As has been said before here the refi window is closing shut as rates rise. Now to keep the trillion dollar annual sausage machine running they are going to have to loosen lending standards. Question is how do WE make money on it?

  14. Great. The metaphorical bomb-packed truck of our economy gains speed as it heads toward the bridge abutment.

    Final doom approaches.

  15. juice (131)-

    Ticker symbol SRS. Great way to play the end of days.

  16. Actually, being in SRS is also a great way to guarantee you throw up in your mouth at least once a day.

  17. JJ says:

    And exactly who is refi’ing at this point? Pretty much the window was open for almost four years. Anyone who qualified who had a rate over 5% did it. Anyone without a mortgage is not doing it and anyone who bought pre-1998 is in principal phase of mortgage or has a balance under 100K which most banks do not allow.

    In MBS land there is a phase called “seasoning” An oddity when past a certain point like year 7 folks general dont refinance no matter how low rates go. For instance someone bought a house in 2002, they could have refinanced in 2002-2004 and from Spring 2009 to Spring 2013. But they did not, they aint doing it. So the quants just do the burn ration or prepayments based on average death, bk or sales of homes and completely factors out refinancing risk.

    If one can afford it and qualify even with higher rates one can still get a HELOC with a 1.99% fixed rate for awhile that goes back to prime. Prime has not gone up and you can get these no fees. One who had a better job could still borrow 100K at 1.99% Throw it towards principal of their 4.75% mortgage and save one or two years bonus checks and pay off HELOC before 3 year reset. Even on a large mortgage banging it with 100K principal in one shot really helps. When short term rates also rise all the tricks are done.

    Juice Box says:
    June 27, 2013 at 10:31 am

    As has been said before here the refi window is closing shut as rates rise. Now to keep the trillion dollar annual sausage machine running they are going to have to loosen lending standards. Question is how do WE make money on it?

  18. xolepa says:

    Does anyone remember the mortgage rate burst of Spring 1987? Rates went on averages from 7% to 9% within two weeks. Home buying slowed down two years later, although house prices did plateau. It was the economy in 1990-1991 that precipitated a price drop more severe than the most current one and any since the depression. I still have a copy of a newspaper article dated in 1991 stating real estate sales lowest and price drops highest since Great Depression.

  19. JJ says:

    I got a mortgage December 1991 and best rate I could find was a 8% three year ARM with a minimum of 25% down. Could not afford fixed rate. Funny if I still owned place most likely would never had refinanced as December 1991 to December 2012 rates went straight down. Even more crazy, my mortgage was for $20,250 dollars. Like $160 bucks a month even at 8%.

    xolepa says:
    June 27, 2013 at 10:48 am

    Does anyone remember the mortgage rate burst of Spring 1987? Rates went on averages from 7% to 9% within two weeks. Home buying slowed down two years later, although house prices did plateau. It was the economy in 1990-1991 that precipitated a price drop more severe than the most current one and any since the depression. I still have a copy of a newspaper article dated in 1991 stating real estate sales lowest and price drops highest since Great Depression.

  20. Fast Eddie says:

    “Funny, people are rushing into higher-risk loans to save deals as rates spike. What happens in five years when their rate starts adjusting upward 2 percent per year? They blow up!” said Mark Hanson, a California-based mortgage and housing analyst.

    Astounding… I’m f.ucking speechless.

  21. 30 year realtor says:

    Did my move up from my first condo into a house in 1991. Bought it from Citicorp for about $120,000. House was in Westwood. Three bed, two bath, about 1800 square feet on 50 X 100 lot and needed about $50,000 in renovations.

  22. 1987 Condo Buyer says:

    #18…my name says it all…..

  23. Libtard in the City says:

    “Now to keep the trillion dollar annual sausage machine running they are going to have to loosen lending standards. Question is how do WE make money on it?”

    Rent-toown, dollar stores, payday loans, whorehouse, pawn shop. The list is endless.

  24. Anon E. Moose says:

    X [18];

    Unless I’m mistaken G-man used to have a great web page linked off the old site in which he compiled news reports chronicling the ’90 bust.

  25. chicagofinance says:

    Without going into details, you are never going to get rich being short for many reasons, up to and including the number of stakeholders involved that need the value of things to maintain….you will be busted out long before you score…..remember you need to borrow to go short, and borrowing gets more expensive as rates rise…..

    Juice Box says:
    June 27, 2013 at 10:31 am
    As has been said before here the refi window is closing shut as rates rise. Now to keep the trillion dollar annual sausage machine running they are going to have to loosen lending standards. Question is how do WE make money on it?

  26. chicagofinance says:

    “The market can stay irrational longer than you can stay solvent.”

  27. chicagofinance says:

    Allocate a swath of floating rate exposure in whatever form suits you…..

  28. chicagofinance says:

    e.g., Libtard is a landlord…..

  29. JJ says:

    2x/3x short long etfs for retail investors are sucka plays

    During sell off this week I bought an investment grade NYS bonds with a 5% coupon for 102.

    Retail always wants products that should not even exist so they are created. But buying a few low cost index funds mixed with a few investment grade corporate and muni bonds is way too boring for average investor but in reality that is most they can comprehend.

    chicagofinance says:
    June 27, 2013 at 12:25 pm

    Without going into details, you are never going to get rich being short for many reasons, up to and including the number of stakeholders involved that need the value of things to maintain….you will be busted out long before you score…..remember you need to borrow to go short, and borrowing gets more expensive as rates rise…..

  30. JJ says:

    Landlord sounds like something Paula Dean would say. It is a kinda of racist outdated term.

  31. Libtard in the City says:

    Slumlord is fine with me. It’s what Gator and I call ourselves anyway.

  32. Libtard in the City says:

    If anyone wants to embrace the true meaning of ultra-liberal, read this article that a longtime resident (former Park Slope resident as per usual) wrote on our local Patch. Then when you are done reading it, google her and find out what she does for a living to determine how someone can feign any personal responsibility for what occurred to her son. It makes me want to puke. Of course if you sympathize for her, I’ll have a unit available in my multi around January 1st, 2014.

    http://montclair.patch.com/groups/opinion/p/shared-grief-and-tragedy-eamonn-wholley-s-untimely-tr9825413e64

  33. Libtard in the City says:

    I know Clot will eat this up!

  34. JJ says:

    You are not a lord of anything, it is lessor or lessee. If anything the tenant is the lord of you.

    I am in the business now, and dont think I will ever buy another place. My damm primary home is getting messy while I fix up the rental place.

    Libtard in the City says:
    June 27, 2013 at 12:59 pm

    Slumlord is fine with me. It’s what Gator and I call ourselves anyway.

  35. JJ says:

    Oddly I think it is Rail Roads fault. Growing up I lived near tracks, train had no back entrace to tracks so you had to walk full length of platfoom cross over at gradecrossing make a right up steps

    The huge apt complex behind had no fence on track, so folks running late would walk over tracks use LIRR worker staircase on back of platform and get on last car of train. Saved a five minute walk. I did it at least 100 times when I was running late as usually someone got killed they build a back way to get on train and put up a fence.

    Valley stream LI tons of dead end streets facing tracks, huge mall on other side, all the kids rather than go on a 20 block walk, just go over tracks, once again someone got killed and they put up a fence.

    Libtard in the City says:
    June 27, 2013 at 1:03 pm

    If anyone wants to embrace the true meaning of ultra-liberal, read this article that a longtime resident (former Park Slope resident as per usual) wrote on our local Patch. Then when you are done reading it, google her and find out what she does for a living to determine how someone can feign any personal responsibility for what occurred to her son. It makes me want to puke. Of course if you sympathize for her, I’ll have a unit available in my multi around January 1st, 2014.

  36. Anon E. Moose says:

    Lib [23];

    Rent-toown, dollar stores, payday loans, whorehouse, pawn shop. The list is endless.

    Was listening to NPR who were profiling a rent-to-own tire shop in FL. They were pitching it as a story about tire price inflation and protectionism re recently imposed tariffs on Chinese tires.

    I think they missed the story — its just a tire shop with a sideline in payday-loans. It worked for the car and heavy equipment mfrs (GM, GE), why not, right? They’re not in the 100% money loan business, they are just leasing a [consumable] product with a buyout at the end. Seriously, what are the odds that someone’s going to come out and put your car on blocks because you’re late on your tire payment.

    I was almost shocked by how foreign the concept of saving money for something as simple and predictable as a new set of tires was to their clientele.

    http://www.npr.org/blogs/money/2013/06/21/194326482/episode-467-tires-taxes-and-the-grizz

  37. Anon E. Moose says:

    Lib [32];

    The preview in Google says “Francine Moccio Anastasopoulos lives in Upper Montclair, New Jersey, she was an academic at Cornell University’s ILR School for nearly 20 years; and now…”

    Unfortunately the link and the cache are not working for me.

    World traveler… Greece, Crete, London – and Madame “Trousseau” [sic, Tussauds], to boot ooh la la…

  38. Painhrtz - Disobey! says:

    Stu, Jewish slumlord which means your the best kind!

    By the by you would have to be a slumlord to turn any kind of return in that hellmouth.

  39. joyce says:

    32

    Couldn’t make it through the whole article.

  40. Painhrtz - Disobey! says:

    Lib that article is weapons grade stupid. I’m pretty sure we can count the number of teens killed each year by NJ transit.

    Surprised I made it past bon vivant, god you should not use that unless you are an actual french art critic.

  41. chi (25)-

    Tell that to Chanos.

    “Without going into details, you are never going to get rich being short for many reasons…”

  42. stu (31)-

    I’m surprised you guys don’t make your tenants call you “massa”.

  43. stu (33)-

    I would eat that up, but pretty much every blog and message board in the Peoples Republic has banned me.

  44. Painhrtz - Disobey! says:

    Scrap it was NJ transit’s fault her son got hit by a train that can only run in a straight line on tracks. Not that her son was an idiot for walking on a tressel. Walk train tracks most of my teen years, we never crossed tressels. The way she wrote it you would think it pounced on her future ward of the state like a lion on the Serengeti. Replace train with lion and it reads a lot funnier.

    She would be the same person complaining that the train gets her to the city to slowly for her feminist body hair comparison classes once it is going at her approved speeds.

  45. Anon E. Moose says:

    Scrap [42];

    You’ve seen Chuck in The Ten Commandments. “Pharoah”

  46. Statler Waldorf says:

    The woman lost her child, perhaps a bit of compassion is in order?

    http://www.nytimes.com/2002/08/21/nyregion/teenager-is-killed-walking-along-tracks.html

    A 17-year-old high school senior who was walking along railroad tracks with friends was killed Monday night after he was hit by a New Jersey Transit train that knocked him to the road below, where he was hit by a car, police and transit officials said.

    The boy, Antonis Anastasopoulos, a talented pianist and composer at Montclair High School, was taking a shortcut along the tracks with his girlfriend and another teenage girl on the way from a restaurant to a video store, said the girlfriend, Alison Holmes. Ms. Holmes, 16, said they did not hear the train coming toward them until it was too late. The three tried to run to the other side of the tracks, she said.

    But the other girl could not move, either out of fright, or because her foot was caught, friends and family members said. Ms. Holmes said she knew the girl only as Abby, and New Jersey Transit officials were not releasing her name.

    ”Tony tried to pick her up to take her across the tracks, and when he saw that the train was too close, he pushed her to the other side, and she was saved, but the train hit him,” Ms. Holmes said, tears streaming down her face as she stood under the tracks today on Valley Road, beside a makeshift memorial to [the boy].

  47. freedy says:

    http://www.breitbart.com/Big-Government/2013/06/27/charges-filed-against-mf-corzine

    Flash: Corzine Charged. Jon is currently relaxing in the Hamptons.

    Could care less , pays the fine and moves on. Case could take years .

  48. Painhrtz - Disobey! says:

    Statler none, she blames NJ transit for her sons death not her kid and his friends poor decisions.

    The appropriate response would have been; my son’s choices were unfortunate, though we mourn our loss we were glad that he helped another even if it was at the expense of his own life. We are said to hear that another family will have to share the same grief as us but is up to us as parents to teach our children that these are dangerous areas not intended for travel by anything other than a train.

    Not NJ transit bad derp, derp derp. I can’t believe I’m defending NJT can’t stand them either.

  49. chicagofinance says:

    Except when you read what this person managed to rationalize over the course of ten years. It ceases to be about what happened a takes on the veil of a magnificent piece of fiction. There is a novel written, when a sentence would do……inexperienced young teenagers ignored written signs and common sense, and froze with fear when faced with an unexpected danger…..ultimately you blame fate, luck, and (bite your tongue) the parents…..but that couldn’t be the answer…….meanwhile, the author is probably first in line to complain about the NSA…..

    Statler Waldorf says:
    June 27, 2013 at 2:52 pm
    The woman lost her child, perhaps a bit of compassion is in order?

  50. The kid hit by a train is a classic case of TSTL.

  51. chicagofinance says:

    You know that there used to be a shortcut between the McD’s and PS22 in Flushing…..I knew enough that I should cross the tracks at 10 years old, even if I was late coming back from lunch
    http://schools.nyc.gov/SchoolPortals/25/Q022/AboutUs/MapsAndDirections/default.htm

  52. chicagofinance says:

    should = SHOULD NOT

  53. Juice Box says:

    She is projecting, there has been a few deaths recently at that crossing, blamed as suicides. Her son was a hero and should be remembered as so. The latest death of a high school senior who died in the same spot is said to be a suicide but she says it is the fault of NJ transit for not razor wiring the entire line. It seems there are allot of suicides by train. Not a fun thing to google search it comes back with allot of pics.

    I know a few who have killed themselves in various ways, but enough of that I am sure we all have our stories.

  54. Painhrtz - Disobey! says:

    Chi other faves from the article balmy August evening. No day has ever been called balmy in August in NJ. “Iron horse of death” genuflect much. A train is and always will be a train. It has no motive other than to be a locomotive. your kid made a dumb decision and paid for it. If he was playing in a constuction site and fell and was impaled on rebar was it the rebar and construction company’s fault? Your kid was trespassing in a dangerous area.

  55. Anon E. Moose says:

    Freedy [49];

    MF Global collapsed in Oct 2011. Throughout the 2012 election campaign, Jon boy was cruising the Hamptons and bundling big checks to re-elect Obama. Jon’s now become expendable. Except, as you said, it will be a slap on the wrist in honor of his loyal service to the liege.

  56. Juice Box says:

    re # 53 – We used to take the 4 train to Yankee stadium back in the 1970s when Munson was catching and Martin was coaching. Our gang of kids ranged in from about 8 -12 years old. None of use died crossing between subway cars or messing around in the station or the tracks, which we did sometimes. It was wild and crazy back then no adult supervision etc, no fear etc that is until the Summer of Sam.

  57. Juice Box says:

    re # 57 – The Savings and Loan crisis oversaw more than 10,000 criminal referrals, this time around what a few dozen?

  58. joyce says:

    57

    And needless to say, it was a civil lawsuit that was filed. Only peons can break the law in a criminal sense.

  59. chicagofinance says:

    Same stories except for me it was the #7 and it was the 80’s. Friend used to pee off the train between cars on the elevated line…….rain today? The forecast was clear skies?

    Juice Box says:
    June 27, 2013 at 4:14 pm
    re # 53 – We used to take the 4 train to Yankee stadium back in the 1970s when Munson was catching and Martin was coaching. Our gang of kids ranged in from about 8 -12 years old. None of use died crossing between subway cars or messing around in the station or the tracks, which we did sometimes. It was wild and crazy back then no adult supervision etc, no fear etc that is until the Summer of Sam.

  60. chicagofinance says:

    I still have an excellent laminated subway map that I stole in 1985 from the subway car. It is 3 feet from the screen on which I am typing right now…..D still goes to Brighton Beach and the C to Rockaway Park.

  61. chicagofinance says:

    Has the JFK Express…..

  62. Libtard in the City says:

    Glad to see that I am not the crazy one here. BTW, there are assemblies every year given by NJT espousing the danger of walking on the tracks. By the way, the author and parent of the risk-taking son is on a mission against the new quarterly assessments that the Montclair BOE (in conjunction with the new Broad Academy Trained Super) has agreed to put in place. The primary reasoning for trying something different is that for the past 10 years or longer, a lot of time and budget has gone into narrowing the achievement gap. Lo and behold, after the last super quit for the richer pastures of Rye New York after regularly boasting of great gains in closing the gap, the truth that no gains have occurred finally surfaced. If there is one thing that separates Montclairion’s from residents of any other town I know (besides perhaps Brigadoon and Park Slope), it’s that they can never admit there could be anything sub-utopian about any aspect of their town. Their debt is sky high. Why it’s acceptable for a town like Montclair. The schools can’t pass AYP. The problem is with the test, not with the school. I’m relatively liberal, especially when it comes to social causes such as the recent hurdle removal to gay marriage, but at least I can think for myself. It’s really like there is a playbook of some sort, or perhaps too many years of watching Stewart and Colbert. Simply mention the word Union and the locals wet themselves. Thank god these ultralibs tend to be good earners.

  63. Libtard in the City says:

    We all did stupid things as kids. I used to know the sewer pipes in Old Bridge, Spotswood and East Brunswick better than the sewer authority. But I wasn’t stupid enough to go in deep when there were clouds in the sky. Lost one of my best friends who got flooded out in the pipes. His mom didn’t blame the sewer authority either. I’ve even subway surfed the 7 as a teenager. The difference here is that the mother sees the issue as 100% the fault of NJ Transit to the point where she would ban trains altogether if she could. They don’t belong in densely populated towns. I mean, why aren’t there major train lines running across South Jersey??? I guess they didn’t teach her critical thinking at Cornell.

  64. chicagofinance says:

    Watch it bub!

    Libtard in the City says:
    June 27, 2013 at 5:24 pm
    I guess they didn’t teach her critical thinking at Cornell.

  65. chicagofinance says:

    The point is a person dealing with denial. The rhetoric is irrelevant…..no matter how well argued. Not suggesting that it was……

  66. Brian says:

    Is it gold bitchez or anybody who owns gold is a bitch.

  67. Gold?

    BTFD.

    That is all.

  68. Guys like Corzine make you wish there was a Star Chamber of real-life vigilante judges that would just erase this bug from the face of the planet.

  69. chicagofinance says:

    Children’s Programming (JJ Edition):
    http://www.youtube.com/watch?v=3TggmiuTCXI

  70. Anon E. Moose says:

    ChiFi [63];

    I still remember that jingle that played endlessly on the radio:

    “Take the train to the plane… Take the train to the plane…”

    http://youtu.be/qkL1LIUsmqc

  71. Libtard at home says:

    I knew I would get you going Chi.

  72. chicagofinance says:

    remember to save for AM for JJ:
    http://www.youtube.com/watch?v=ljWrB1Dk34k

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