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From today's business section of the New York times

Since the election, mortgage rates have climbed roughly half a percentage point to a 16-month high, adding hundreds, sometimes thousands, of dollars to a home buyer’s yearly payments. (The annual cost of a $400,000 mortgage, for example, rose almost $700.)

The speed and size of the increase took many lenders and borrowers by surprise — and the increase is expected to reverberate across the housing industry, particularly if rates continue to rise next year.

For most of this year, American home buyers have benefited from weakness in the global economy. China has been struggling to sustain the rapid growth it needs to avoid political unrest, a deep recession followed political turmoil in Brazil, and a cloud of uncertainty hangs over Europe after Britain’s vote to leave the European Union.

Those factors, on top of efforts by central banks around the world to stimulate economic activity by keeping short-term interest rates low, have increased demand for safe American assets like government bonds and mortgage-backed securities. The result: The cost for American businesses and consumers to borrow had, until recently, remained exceptionally low.

The turnaround, which was driven by postelection market expectations that a President Trump would lift corporate profits, cut taxes and spend money on infrastructure and roads, caught most experts by surprise. The online real estate brokerage Redfin, for example, had initially forecast that rates for 30-year fixed mortgages would remain below 4 percent through next year, said Glenn Kelman, the company’s chief executive.

Redfin has now updated its forecast and is predicting the 30-year mortgage rate will pass the 4 percent threshold. “I think you’re going to see higher rates than we otherwise would have,” Mr. Kelman said, “but more economic stimulus.”

Wall Street is also expecting that the Federal Reserve Bank will increase its benchmark interest rate when it meets next month. That rate the cost that banks and depository institutions charge one another for overnight loans — has only an indirect impact on mortgage rates. Last December, for instance, after the Fed raised rates by a quarter of a percentage point, mortgage rates went down. But to the extent it reflects the Fed’s confidence in an improving economic outlook, it could signal higher borrowing costs in the months ahead.

For now, said Svenja Gudell, chief economist at Zillow, a real estate data provider, the relatively modest increase in mortgage rates should not have much impact on the current housing market.

On Tuesday, the National Association of Realtors reported existing home sales rose 2 percent at a seasonally adjusted annualized rate in October, its strongest pace since February 2007, before the recession started.

Back then, the average 30-year fixed rate mortgage topped 6 percent, a reminder that even with the recent rate jump, mortgages remain a bargain by historical standards. Thirty years ago, the average rate was about 10 percent.

Still, for buyers who had been counting on paying less that 3.5 percent, the postelection bump represents an unwelcome added cost.

In the last couple of weeks, requests for refinancing have dropped, according to Gregory Gwizdz, national sales manager of Wells Fargo Home Lending, one of the nation’s largest home loan originators. He expects that trend to continue through next year as rates stay at this level or inch higher.

“If people believe rates are on the rise,” he said, “they may try to find that home sooner rather than later.”

Higher rates are often followed by a burst of activity from consumers worried about further increases. But Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he had not seen evidence of pent-up demand. He thinks housing activity is heading for a fall.

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Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

FM
ba$eman posted:

Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

Baseless, you're a top flight spin bowler.

Kari
Kari posted:
ba$eman posted:

Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

Baseless, you're a top flight spin bowler.

Diarrhea of the mouth!!  Shut up and go under a rock.  You are a clueless, headless fowl!

Listen you fool, I know Mars said you missed quite a few classes in QC running after Burnham cadet magic.  You have since become a student of Google, so here, I made it easy for you, read up and check out few more.

Your dumb ass was busy plotting Hillary's wipe out of Trump up to Nov 8 at 6pm.  You just talk too freaking much trying to get attention onto yourself to ever hear anything/anyone but yourself.

http://money.usnews.com/invest...-hooked-on-low-rates

FM
VishMahabir posted:

.

My uncle told me his 401K took a big jump since the election and he is happy with that.

Yes it is 0.6% above the peak of a few months ago.  Jump for joy at the "boom".

FM
ba$eman posted:

Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

Baseman I know that you are an Indo KKK, and therefore an IGNAR, but the Feds have NOT increased their interest rates yet.

What we have seen is an increase in long term rates, usually an indicator of increased risk of inflation.

FM
caribny posted:
ba$eman posted:

Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

Baseman I know that you are an Indo KKK, and therefore an IGNAR, but the Feds have NOT increased their interest rates yet.

What we have seen is an increase in long term rates, usually an indicator of increased risk of inflation.

Listen banna, they are pricing in an expectation.  The markets know that Trump wants higher rates.  Yes, there is also an increase risk of inflation as they expect increased growth.

The Feds kept rates low to help prop the economy in the absence of a stimulus!

FM
ba$eman posted:
caribny posted:
ba$eman posted:

Kari's latest battle cry, rising interest rates.  The FEDs kept rates low keeping Obama's weak economy of life support.  This was never sustainable.  Now that Trump will take over, the economy will grow and Interest rates have to become more realistic!

Baseman I know that you are an Indo KKK, and therefore an IGNAR, but the Feds have NOT increased their interest rates yet.

What we have seen is an increase in long term rates, usually an indicator of increased risk of inflation.

Listen banna, they are pricing in an expectation.  The markets know that Trump wants higher rates.  Yes, there is also an increase risk of inflation as they expect increased growth.

The Feds kept rates low to help prop the economy in the absence of a stimulus!

Baseman you don't know anything on this topic, so quit while you are ahead. When interest rates rise those who already own bonds, especially those with a long term duration,  LOSE.   Now figure out why this is so!

FM
caribny posted:

Baseman you don't know anything on this topic, so quit while you are ahead. When interest rates rise those who already own bonds, especially those with a long term duration,  LOSE.   Now figure out why this is so!

Listen banna, on the secondary market, prices move to reflect the yield vs face value!!  The coupon rate remains fixed so the value of the bond has to move to reflect reality of the market rate!

In the end, those pension funds and fixed rate earners shitting in their pants to meet current obligations!  This is why they rotate to riskier dividends-yielding instruments!

FM
Last edited by Former Member
ba$eman posted:
 

Listen banna, on the secondary market, prices move to reflect the yield vs face value!!  The coupon rate remains fixed so the value of the bond has to move to reflect reality of the market rate!

In the end, those pension funds and fixed rate earners shitting in their pants to meet current obligations!  This is why they rotate to riskier dividends-yielding instruments!

Listen idiot.  If you buy a bond with a coupon rate, and rates rise, then the bond is worth LESS.  Who wants a bond with a 1.6% rate, if the rate is now 2%? 

There is a reason why bonds are called fixed rate instruments.

So baseman, go scream "black man a kill ahbe" because that is all you know.  Some one with a bond portfolio isn't jumping up for joy when rates rise, unless he plans to hold the bonds to maturity!

And in addition dividend heavy stocks also perform poorly in rising rate environments!  See if you can figure out why.

And the equity markets will also ultimately be adversely impacted if there is a sustained increase in interest rates. Why you think the market panics every time they think that the Fed is going to increase rates?

And then so will the overall economy when consumers reduce the purchase of homes and big ticket items which are financed.

Obviously you didn't even read page 1 of Economics 101.

FM
Last edited by Former Member

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