4% 30 Year Mortgage

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Submitted by trex on March 18, 2022 - 6:56pm

Submitted by Coronita on March 18, 2022 - 7:37pm.

10/1 rates are low.

Submitted by an on March 18, 2022 - 7:48pm.

Didn't stop the price increase in the 70s.

Submitted by The-Shoveler on March 18, 2022 - 11:25pm.

I remember my friend paying extra points to get an 11% fixed rate in the 80's.

Housing was still going nuts in LA at that time, but there was a crazy amount of defense spending the cold war was on full steam.

Submitted by spdrun on March 19, 2022 - 6:49am.

10/1 rates are low.

Now that would be fun to watch ... investors taking ARMs now, then being forced into shortsale when they re-adjust.

Submitted by spdrun on March 19, 2022 - 6:52am.

Didn't stop the price increase in the 70s.

Rates were mostly 7-9% until 1979-80, when they shot up to 11%.

Under 3% to over 5% represents a bigger % variance than existed through much of the 70s.

Submitted by The-Shoveler on March 19, 2022 - 9:01am.

One more coincidence or similarity to current times is the boomers were just hitting their 30's. but come 89-early 90's in LA at least when the cold war was winding down things went south fairly quickly. Took almost to 97-99 before the next bubble got really going and housing (in LA) to really recover.

Submitted by sdrealtor on March 19, 2022 - 10:09am.

The-Shoveler wrote:
One more coincidence or similarity to current times is the boomers were just hitting their 30's. but come 89-early 90's in LA at least when the cold war was winding down things went south fairly quickly. Took almost to 97-99 before the next bubble got really going and housing (in LA) to really recover.

I remember how rough things were in early 90s around here. I went back to grad school and then moved back east for a couple years to finish those degrees. Very fortunate to have come back in 97 ready to buy my first home. I’ve made many very smart decisions along the way but they were all made possible by the luck of that game changing timing that created the opportunity of a lifetime for me that I recognized and jumped at

Submitted by barnaby33 on March 19, 2022 - 1:13pm.

Rates bottomed around 2.75% for a 30 year fixed? If so the move to 4% is massive in terms of % increase. Given how much greater our entire economy (not just housing) is levered to interest rates, I'll be shocked if this doesn't blunt to top appreciation.
Josh

Submitted by sdrealtor on March 19, 2022 - 2:03pm.

Im below 2.75% so I guess I beat it again:)

Again people keep missing the point Ive been trying to make. When rates were that low the lenders didnt offer anything but 30 yr and if hybrid adjustable (10/1, 7/1. 5/1) the rate was not all that different. We have all gotten used to only 30 yr rates.

Youve all forgotten about those hybrid products. When I bought my home in 1999 it was with a 5/1 ARM at 7.125%. Virtually no one keeps a loan for 30 years and few are still in place 10 years later. We are going to see the 10/1 and 7/1 come roaring back into favor very quickly. Its what the market always does when rates are no longer falling. Mark my words this market has more legs than you think. Im not saying more 20%+ years but we arent done going up and we are not falling appreciably anytime in the next few years. Feel free to bookmark this post. This will be yet another prediction I'll be proven right on

Submitted by XBoxBoy on March 19, 2022 - 5:49pm.

sdrealtor wrote:
Virtually no one keeps a loan for 30 years and few are still in place 10 years later.

I would bet that the percentage of people keeping their 30 year loans more than 10 years will increase in the coming decades. A lot of people with really low rates ain't going no where, and probably won't get a good opportunity to refinance. Just a hunch.

Submitted by sdrealtor on March 20, 2022 - 8:03am.

I agree that more will but as they say life gets in the way for a lot of us

Submitted by Coronita on March 21, 2022 - 6:39am.

XBoxBoy wrote:
sdrealtor wrote:
Virtually no one keeps a loan for 30 years and few are still in place 10 years later.

I would bet that the percentage of people keeping their 30 year loans more than 10 years will increase in the coming decades. A lot of people with really low rates ain't going no where, and probably won't get a good opportunity to refinance. Just a hunch.

I think with low 30 year interest rates locked in 3% and below, that's below where people say a 4% decent investment is. So yes, I'd think some folks even will eventually be a landlord even if they wanted to move elsewhere. New buyers however, I can seem getting 10/1 arms.

Submitted by The-Shoveler on March 21, 2022 - 10:51am.

There are probably going to be a lot of new mortgage products.

50 - 70 - 100 year mortgages
interest only
Maybe equity sharing.

Who knows, the issue this time is we are not overbuilt so a big housing crash is unlikely IMO.

Submitted by pencilneck on March 21, 2022 - 11:12am.

Hypothetical:

Two contrasting rates and expectations:

30 year @ 2.75% - inflation at 2% annualized with long term expectations in the 2-3% range.

30 year @ 4% - inflation at 7% annualized with long term expectations in the 3-7% range.

Isn't the second loan less expensive than the first?

Submitted by deadzone on March 21, 2022 - 11:14am.

MBS market continues to crap the bed, blowing past 52 week low today. And Fed still hasn't even begun to unwind their MBS holdings.

Submitted by sdrealtor on March 21, 2022 - 11:32am.

Oddly enough my house keeps going up around here just like the everyone else's. Supply and Demand

Submitted by deadzone on March 21, 2022 - 11:43am.

Until it doesn't. Rapidly rising interest rates definitely not going to increase demand in the long run.

Submitted by sdrealtor on March 21, 2022 - 12:17pm.

Who cares! My house is already worth double what my wildest dreams were and its still going. You dont understand how real estate works. Wait for the adjustable loan products to deal with those rising rates. Bookmark it!

And demand is 10X or more supply. Less demand not as big an issue as you beleive. This is probably the tightest market in the country! opportunity of a lifetime missed!

https://cdn.substack.com/image/fetch/f_a...

https://cdn.substack.com/image/fetch/f_a...

Submitted by Coronita on March 21, 2022 - 12:20pm.

G...OOAL....!!!!

Greatest Opportunity of a Lifetime.

Just like soccer!!!

Submitted by deadzone on March 21, 2022 - 12:54pm.

sdrealtor wrote:
Who cares! My house is already worth double what my wildest dreams were and its still going. You dont understand how real estate works. Wait for the adjustable loan products to deal with those rising rates. Bookmark it!

And demand is 10X or more supply. Less demand not as big an issue as you beleive. This is probably the tightest market in the country! opportunity of a lifetime missed!

https://cdn.substack.com/image/fetch/f_a...

https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F2e6b95e4-af5c-478d-b053-7183880f5703_513x680.png

Who cares? Apparently you do, or else why would you comment on this? Seems to me that deep down you are worried, very worried about this whole bubble thing going POP.

But really there is no debating someone who truly believes RE isn't interest rate sensitive, it is like trying to argue with a flat earther.

Submitted by sdrealtor on March 21, 2022 - 1:24pm.

Not worried in the least. I just met with a builder to add a 2BR/2BA unit on that will have a 5 to 6 year payback with an insane cap rate.

You do not understand how this all works which is why you missed out on the GOOAL! Its not that interest rates dont matter its that there are still lots of tools out there like hybrid adjustable rate mortgages as well as massive amounts of cash and buyers. Tightest market in the country! GOOAL!

Submitted by Coronita on March 21, 2022 - 2:06pm.

https://www.redfin.com/CA/San-Diego/7785...

G...OOAL.....

1.65m in Mira Mesa. lolol

Submitted by Coronita on March 21, 2022 - 2:26pm.

So it would be interesting to see for a list of closings in MM over $1mil what sort of loan these people are getting and the type of buyers...

Submitted by deadzone on March 21, 2022 - 2:29pm.

sdrealtor wrote:
Not worried in the least. I just met with a builder to add a 2BR/2BA unit on that will have a 5 to 6 year payback with an insane cap rate.

You do not understand how this all works which is why you missed out on the GOOAL! Its not that interest rates dont matter its that there are still lots of tools out there like hybrid adjustable rate mortgages as well as massive amounts of cash and buyers. Tightest market in the country! GOOAL!

Okay we'll see how many cash buyers are still out there later this year as interest rates keep ratcheting up.

Submitted by Coronita on March 21, 2022 - 2:39pm.

deadzone wrote:

Okay we'll see how many cash buyers are still out there later this year as interest rates keep ratcheting up.

Huh? This makes no sense whatsoever.....

Higher loan rates, you would see more cash buyers. Lower loan rates, you would see more smart money that would want to put the least amount of money into their house because rates are so cheap.

With a 3% 30 year, why would you want to own outright, unless you simply had too much money than what you know to do with it?

What I'm more curious about is out of these $1million homes, how many of them are putting 20-25% down and what sort of demographics they are.

If I were to guess I would say the bulk of them are 20-25% or round up to a $1million loan @ around 3% ...enginerds at a decent company, $20-25K monthly income, carrying a $5000/month mortgage... Easy peasy...

Submitted by sdrealtor on March 21, 2022 - 2:41pm.

Who said anything about cash buyers? Just did a run through recent sales in MM in the 1.2 to 1.5 range. Pretty much all of em put down 20 to 30%. Why would they put down more? A quick cross reference with LinkedIn shows lots of techy couples at QCOM, Apple, Amazon etc. Figure it costs about $5K/month to borrow $1M with rates above 4% which is not a stretch for folks with $20 to 35K monthly HH incomes. Well within ratios and most of these folks are pretty frugal otherwise. There are tons of folks like that

Submitted by Coronita on March 21, 2022 - 2:41pm.

sdrealtor wrote:
Who said anything about cash buyers? Just did a run through recent sales in MM in the 1.2 to 1.5 range. Pretty much all of em put down 20 to 30%. Why would they put down more? A quick cross reference with LinkedIn shows lots of techy couples at QCOM, Apple, Amazon etc. Figure it costs about $5K/month to borrow $1M which is not a stretch for folks with $20 to 35K monthly HH incomes. Well within ratios and most of these folks are pretty frugal otherwise. There are tons of folks like that

Lol, I called it...

G....OOAL.......

Submitted by sdrealtor on March 21, 2022 - 2:42pm.

Yes you did!

Submitted by Coronita on March 21, 2022 - 2:46pm.

But wait. Aren't these buyers/borrowers remote workers that work for the bay area and now that everyone has to return back to work, don't they need to sell?

I mean, they can't possibly be working here locally in San Diego in one of them local offices since clearly we haven't seen any meaningful job expansion in San Diego recently, right? I mean, these people who work at Amazon, Apple must all have to go back to work at Amazon and Apple headquarters not based out of San Diego, and it will be a firesale home prices, right?

I mean, their linkedin profile must be saying they are based out of Seattle and Bay Area, right?

Submitted by sdrealtor on March 21, 2022 - 2:54pm.

Lots of healthcare workers also. Physicians and PA's abound! Research scientists, business owners too. Just not many defense guys

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