Posted on 02/06/2010 2:54:01 PM PST by taildragger
I went to my Credit Union Today in Michigan.
Big sign in the lobby by the greeter, Check our out new low Mortgage Rates! So I inquired asking the young lady for the sheet. To my surprise no 30 year fixed offered. I asked are you afraid of Inflation coming back and getting whipsawed by holding long paper with rates lower than inflation? She looked at me like I was from Mars, since she was way to young to remember Jimma Carter.
She mentioned that the Mortgages types (they had a big seminar) noted that they decided not to offer them because the client base was not holding onto them long since they changed house often and going to products like ARMS when they did, and they were going to hold their own "paper" again given the firm the dealt with ( buyer or seller? ) has had some difficulties.
I have so many thoughts on this. One, they may have faith in their client base to hold their own paper, or they believe they are a good risk (note the CU is highly rated ). Possibly they want clients to not over-extend with consumer purchases and nothing concentrates that spending pattern like a 10 or 15 yr mortgage.
Or are they seeing real inflation on the horizon. I was stunned, I have never seen a bank or CU not offer a 30 yr fixed...
Man I have heard of mortgage companies offering 40 year loans now...your finance place is tough. We have been talking about inflation forever...I know it will eventually get here but it seems like we discuss it often and nothing ever happens.
To all
Roughly what are the current rates?
A bit stunned, high 4's ( don't quite me here) either 4.6-4.7ish with some points. The rate varied with the points paid.
But their was no "no-points" rate.
BTTT...
, with 15 year mortages being 4.4%
Looking at a mortgage calculator, the 30 year's monthly payment on a $250K loan would be $1,357.37, while a 15 year mortgage (with lower interest) would be $1,899.73. In this environment, it makes sense to go 15 year.
My current mortgage is 4.85%, I refinanced at the last dip in rates.
Caught it almost exactly in the trough!
That bit of timing will never happen again :) !
Looking for your feedback on this, you guys and gals usually have some great insight....
Not inflation. Something worse: deflation. The lack of credit.
My credit union has never offered 30 year fixed, only 20 year. The reason being most military careers are 20 years. This is the reason, but they also have lower rates on plus side.
Read you bio, A Mooney, nice :-).....
I just refinance at 10 years 4.2% no points. Citimortgage.
On the one hand, Bernanke has dumped $4 trillion in liquidity (paper) into the market and he is still battling deflation.
Look at this econ professor’s site. Look at the 5.7% earnings announcement. He shows a 450 bp yield curve which, typically, predicts big inflation.
http://mason.gmu.edu/~asander7/
Also, I heard this guy (Sanders) speak at a commercial real estate CEO conference last week. He made that point that Bernanke’s strategy for the massive debt that we can never pay off is to inflate our way out of it. So, Bernanke will eventually get his inflation.
He pointed out that Fannie and Freddie has $6.5 trillion in mortgages ad guarantees and the Fed is sitting on $1.25 trillion of mortgages. All will get blown away when inflation hits.
Pray for us all!
Thanks.... He confirms what I hear that why loan to small business when they can buy fed-debt. The rest of the picture he paints ain’t pretty at all...
Inflation would be a blessing. Can’t get it, too bad. Look at Japan. They’ve borrowed far more and spent far more than has the U.S., and yet Japan’s been stuck in deflation since 1989.
Here in the U.S. we’ve got 19 million vacant homes and 77 million Baby Boomers who began hitting retirement age back in 2007, and will continue to retire through 2025. All of those Boomers want out of their McMansions. They want cheap little retirement condos, now.
Well, home prices aren’t going up (inflation) with 77 million retirements and 19 million already-vacant homes.
In fact, the opposite is happening: homes have plunged in price. Deflation.
Next will be salaries.
And then, commercial real-estate will deflate.
This is an implosion, not an explosion. A collapse, not a bubble.
Deflation, not inflation.
Sure, the U.S. can spend/borrow like Japan has since 1989...but we’ll just get what Japan got: a dearth of credit and a surplus of deflation.
To get a different result than Japan got, you better try something different...like reforming government (shrink it!)...like letting money-losing businesses fail (GM! AIG!)...like reducing regulations and taxes, etc.
It is a good “inquiring minds want to know” question...
It is notthe term ofthe loan, it is how often the rate adjusts.If you have an adjustable rate loan, keep your eyes open!
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