Mortgage rates and the housing market

[Skatastrophy]

I'm fine with meteor strikes being a special assessment.

[21Jumpstreet]

Do you think fully funding your reserves is a bad thing?

Every year I voted to fully fund the reserve, every year the HOA voted to defer and pay as we went. Generally, I think it should be up to the individual condo associations.

[dgies9156]

Every year I voted to fully fund the reserve, every year the HOA voted to defer and pay as we went. Generally, I think it should be up to the individual condo associations.

That's what the residents of Sunrise thought too!

[21Jumpstreet]

That's what the residents of Sunrise thought too!

Additionally, I think Sunrise was negligent in their maintenance and planning. Perhaps that was a function of reserve, perhaps it was potentially criminal conduct by the board.

[dgies9156]

Additionally, I think Sunrise was negligent in their maintenance and planning. Perhaps that was a function of reserve, perhaps it was potentially criminal conduct by the board.

Based on the reporting down here, the Sunrise Board was negligent primarily because the HOA Board was working to keep the annual assessments down. In Florida, particularly with "past their prime" buildings, there is much pressure on Board members to keep the assessment low. The first thing out of most people's mouth on the issue is, "I'm on a fixed income..."

Was the Sunrise Board criminally negligent? Probably not.

Was the Sunrise Board naïve about the risk they were taking? Most likely! I doubt anyone, including the engineers, thought the structural weaknesses and deficiencies would lead to a collapse. But they knew there were problems that needed to be addressed and those problems weren't, again largely because of managing assessments.

[MU82]

Several countries, including Canada, Australia and some in Europe, have something called "mortgage assumability," where new owners of a house "assume" the mortgage terms of the seller (with full coverage of existing equity). It happens in the U.S. on a limited scale with FHA and VA loans, but some are wondering if the practice can be broadened to help solve one of the problems that are making houses less affordable now.

Another proposed remedy is "mortgage portability," which lets buyers or sellers simply "port" their existing mortgage terms to a new location. It could really make a dent for both buyers and sellers of a transaction.

However, in America, most of the record-keeping and taxation is done on a county-wide level, which would complicate any attempt to use either of those solutions nationwide. Additionally, something pretty unique to the U.S. is the way mortgage holders sell mortgages. One house's mortgage could get sold a dozen times in a 30-year period.

[The Hippie Satan of Hyperbole]

The idea of mortgage portability makes sense to me, but my guess is the lenders would be concerned about interest rate risk so the rates wouldn't be super low. Also this may make it difficult of a mortgage holder needs to bridge between two purchases.  But I like the concept

[Hards Alumni]

The real question is if there is any financial incentive for the lending companies to do it.  If not, it won't happen.

[jficke13]

I’d think there’s incentive to write new mortgages for each transaction, that way brokers can exact their rents for being middlemen in the transaction. Not sure they’d be able to do so if I just maintained my mortgage terms on New House.

[The Hippie Satan of Hyperbole]

One incentive could be that lenders would be able to hold onto customers, by offering some sort of transaction fee that would be lower than the traditional closing cost. These are probably your typical banks who aren't inclined to sell your mortgage or use outside brokers.

[dgies9156]

The idea of mortgage portability makes sense to me, but my guess is the lenders would be concerned about interest rate risk so the rates wouldn't be super low. Also this may make it difficult of a mortgage holder needs to bridge between two purchases.  But I like the concept

Brother Hippie is right on the money for part of this one.

No lender in their right mind is going to permit portability of a 3.25 percent, 30-year, fixed-rate mortgage in a 6.75 percent to 7.50 percent mortgage market. Not going to happen. Plus, originators lose out on the origination fee. Only way I ever could see it happen if the fee was a "mark to market" fee that effectively gives a holder a fair market value or fair value yield.

Portability also doesn't work because the loan is secured by a specific collateral property. Loan documents, especially secondary mortgage market-qualified documents, have due on sale clauses. They are there for a reason.

Years ago, before the savings institutions crisis that began in 1979, many mortgages had an assumability feature that allowed a new buyer to "assume" the existing mortgage on a home, subject to a fee. That went out the window when mortgages were in the 5.00 percent range and the market was in the 14 percent range.

Interest rate risk is a nasty bi__h.

By the way, Brother Hippie, very few commercial banks except for the large money center banks, actually hold residential mortgages in portfolio. They sell them because they don't want the interest rate risk.

[Skatastrophy]

By the way, Brother Hippie, very few commercial banks except for the large money center banks, actually hold residential mortgages in portfolio. They sell them because they don't want the interest rate risk.

Yeah, the regional FI an in-law works for can only close on a few properties in Chicago each year. Their FI doesn't sell their mortgages, and they are legally not allowed to concentrate their lending in a region that is not of their stated focus.

FIs have a lot of rules and regulations.

[dgies9156]

FIs have a lot of rules and regulations.

I know!

I've worked in the business since the 1980s. Given what a bank failure can do to a regional or even national economy, there has to be extensive regulation.

Interest rate risk is what drove the savings institution business into an ill-planned, poorly executed commercial real estate diversification in the 1980s. That in turn, killed the thrift industry. The credit union business is going down the same path now, hopefully with better results.

Because we had such a long period of very low market interest rates, there is enormous interest rate risk in the banking system today. What's worse, some of that interest rate risk will become credit risk when balloon loans mature and borrowers can't afford new credit.

[MU82]

The Number in this afternoon's WSJ e-newsletter:

$19,000+

The starting point for monthly rent for a luxury 1,100-square foot property in Monaco, making it the world’s most expensive residential rental market, according to real-estate company Knight Frank’s May analysis of the top 1% of properties in different cities. That’s 36% higher than in Hong Kong, which came in second; New York prime rentals start around $9,200 a month. International renters like Monaco’s favorable tax policies and access to the high life.

[lawdog77]

The Number in this afternoon's WSJ e-newsletter:

$19,000+

The starting point for monthly rent for a luxury 1,100-square foot property in Monaco, making it the world’s most expensive residential rental market, according to real-estate company Knight Frank’s May analysis of the top 1% of properties in different cities. That’s 36% higher than in Hong Kong, which came in second; New York prime rentals start around $9,200 a month. International renters like Monaco’s favorable tax policies and access to the high life.

That's alot of rent to pay for access to a sh!tty beer.

[MU82]

According to Freddie Mac, 30-year mortgage rates are under 6.5% for the first time in more than a year. (6.47%)

Rates don't always follow Fed cuts and hikes, but they often do. So if the Fed cuts twice this year, as expected, and then several times next year, maybe mortgages could get back down to 5%?

Here's hoping, because that would help a lot of people and maybe would light a fire under a stagnant housing market.

[CreightonWarrior]

According to Freddie Mac, 30-year mortgage rates are under 6.5% for the first time in more than a year. (6.47%)

Rates don't always follow Fed cuts and hikes, but they often do. So if the Fed cuts twice this year, as expected, and then several times next year, maybe mortgages could get back down to 5%?

Here's hoping, because that would help a lot of people and maybe would light a fire under a stagnant housing market.

Rates precede rate cuts/hikes and are basically reactionary to what we expect the fed to do.

We saw big rate movement last week after jobs because the sentiment changed from .25 in sept to possibly .50 in sept and more in oct or dec.

Any movement the day of the cut ties to their dot plots or where they expect to move at future meetings.

 

[4everwarriors]

According to Freddie Mac, 30-year mortgage rates are under 6.5% for the first time in more than a year. (6.47%)

Rates don't always follow Fed cuts and hikes, but they often do. So if the Fed cuts twice this year, as expected, and then several times next year, maybe mortgages could get back down to 5%?

Here's hoping, because that would help a lot of people and maybe would light a fire under a stagnant housing market.

Housin' market ain't stagnant here, hey?

[MU82]

Housin' market ain't stagnant here, hey?

There is a large inventory of housing stock available in the Mequon market in a variety of price ranges? That's great to hear!

[rocky_warrior]

There is a large inventory of housing stock available in the Mequon market in a variety of price ranges? That's great to hear!

You'll have to forgive doc.  I'm sure many houses are selling below market in his hood due this horrible economy.   

My hood is approaching record numbers of listings.  But not below market.

[TAMU, Knower of Ball]

There is a large inventory of housing stock available in the Mequon market in a variety of price ranges? That's great to hear!

Was curious so I looked. 44 houses for sale in the Quon. A whole 3 of them are cheaper than 455,000! The cheapest one at 325,000 was built in the 1930s is described as "having potential for your ideas". The second cheapest at 399,000 is 1500 sq ft and described as "Lots of potential and an opportunity to be a beautiful home again".

So, one ready to live in home under the price of 455,000

[MurphysTillClose]

Was curious so I looked. 44 houses for sale in the Quon. A whole 3 of them are cheaper than 455,000! The cheapest one at 325,000 was built in the 1930s is described as "having potential for your ideas". The second cheapest at 399,000 is 1500 sq ft and described as "Lots of potential and an opportunity to be a beautiful home again".

So, one ready to live in home under the price of 455,000

Mequon sucks

[muwarrior69]

My property taxes increased $2500 and are now just under 16K (while they laid off 10% of the teachers in our school district), utilities increased 6%, just went to Costco for our regular run of stuff, $680.

[The Hippie Satan of Hyperbole]

My property taxes increased $2500 and are now just under 16K (while they laid off 10% of the teachers in our school district), utilities increased 6%, just went to Costco for our regular run of stuff, $680.

Thanks!

[muwarrior69]

Thanks!

You're Welcome!