^ 30-year mortgage rates highest since Sept 2003
WASHINGTON, May 13 (Reuters) - U.S. 30-year fixed rate
mortgages rose to their highest level in over seven months as
signs of a rebounding economy led to inflation fears and
speculation that the Federal Reserve might raise interest rates
in the near future, Freddie Mac said on Thursday.
Freddie Mac said U.S. 30-year mortgage rates averaged 6.34
percent in the latest week, up from 6.12 percent a week ago and
the highest since they averaged 6.44 percent in the Sept. 5,
2003, week. It was also the third straight week that 30-year
mortgage rates were over 6 percent.
Fifteen-year mortgages rose to an average of 5.72 percent
from 5.47 percent the prior week, also the highest since the
Sept. 5, 2003, week when they averaged 5.77 percent.
One-year adjustable rate mortgages inched upward to an
average of 3.90 percent from 3.76 percent last week.
A year ago, 30-year mortgage rates averaged 5.45 percent,
15-year mortgages 4.84 percent and the ARM 3.67 percent.
"Last month's huge surge in employment figures reaffirmed
market expectations that the Fed will move sooner now rather
than later," Frank Nothaft, Freddie Mac vice president and
chief economist, said in a statement.
"This put pressure on the bond market, and as yields grew,
so did mortgage rates," he said.
I have voted republican for 25 years. I am so disgusted with the deficit spending, trade imbalance, Iraq war which I think was 100% unnecessary and a diversion from getting Al Queida (the ones who attacked us 9/11), jobs going out, etc. I am seriously thinking of voting for Kerry. I thought about voting for Nader as a protest vote but that will help Bush get elected again.
NVR has been so strong in a downward market that I am leaning towards a short term buy (still think it is a bad short right now).
Bush is the largest tax collector in history that directly effects homebuilders and you don't even see it. The deficet tax. $400 billion and rising. With a national debt of $6.7 trillion, the 8 percent deficet/debt rising rate. It is also instanteous. Except for the future prediction of the deficet.
Imagine a 2 person economy each with $10. Person A sells apples to person B for $1. What happens if the government gives each person and extra $10 through a deficet. I would be person A would sell Apples for $2.
Now assume the goverment gives each $10 every year. What happens when person B wants to borrow money from person A.
Deficets directly cause inflation, higher interest rates, and a weaker dollar. All through dollar dilution. It is effectively a tax.
Rising oil prices are directly attributable to this dilutuion.
Yeah John Kerry will be able to correct the problem. Thats the first you are a lunatic, putting this belief into any politician. Industries, economies, rates, everything contain peaks and valleys. There isnt anything Kerry can do or you think he can do to correct what ever prediction you have made. I have yet to hear anything significant from Kerry besides lets ask the UN and back when I was in Vietnam. High taxes also help out, sure John, sure they do-jay
NVR builds homes they don't own homes. Yes, when interest rates rise to 6 percent short and 10 percent long after the election, refinancing and home affordability will drop. But, you are missing one cog in the equation. Prices for wood, nails, copper, glass, wages, are all going to be going up with the deficet tax. There will not be hugh foreclosures. Nobody will want to lose their low interest rate loan, in a foreclosure. Home affordability will drop, but with a p/e of 7, with 1/2 the revenues we have now, and the buybacks, we will pass through it. Hopefully Kerry will be elected to stop the madness.
I am still bearish on 2005 but could be wrong as stated in previous posts. I rate NVR as a hold still and not a short for 2004. HB's and real estate in general are too strong this year to make a long term short trade (too early). If there is a "election rally" early next year it may be a super short---but I need to look at the weaker HB's first and the overall economy trend.
Thanks. I agree on what you said about the complex market--I think if the bear market does hit real estate it will be drastically different in certain parts of the country. Here in the Northeast I would say that condo's would be hammered more in price than houses. Many towns have 1 to 3 acre zoning and this drastically reduces how many houses can be built. Other areas such as Charlotte NC may develope a major supply problem, but the prices are so low compared to Northeast that a drop in prices may not be that significant. As for NVR I have no position currently because I cannot make a call as to shorting or going long at this price (It is on my Watch list). If you have a long term position and bought it low you should be OK this year due to the election and buyback program.
you are going to be wiped out
Housing has joined the small cap and emerging market bubbles and the large caps topped out in 2000.
Add to that the bond bubble and the China bubble and what you have is the perfect recipe for a liquidity driven world wide crash.
We are just starting to see the beginnings of it now and by Fall it will wipe out most people.
The Fed and other central banks around the world have tried to fight DEFLATION by debasing monetary systems (printing gobs of money, wildly in excess of GDP).
The net result of this has been to cause MASSIVE amounts of excess capacity to be built, and to lure consumers into disasterous levels of debt.
NOW we are seeing how that has impacted commodities and the raging inflation (oil is running at a 38% annualized rate of inflation) that is causing will FORCE those central banks into a panic mode of tightening.
The liquidity goes away and the bubbles collapse of their own weight, except we are now at a level of worldwide excess that FAR exceeds what we saw in 2000. 2000 was mostly a tech thing. This reaches into all markets and all sectors.
Won't say we are headed to a 1929 scenario but do not rule it out. In some ways the excess is far greater this time.
One clue as to what is REALLY going on is this simultaneous rally in stocks, bonds, and GOLD, all of which reversed when the dollar reversed its slide....
That confounded the gold bugs who think we are headed for rampant inflation and confused me for a while too, but it has become quite clear what is going on.
Most people won't even see it coming.
The market is going to over react and drive long rates as high as they did in 1994. Remember Orange Co and LLTC?
The Fed has lost the battle and the markets confidence. The more the Fed tries to hold back rate increases, the worse the market is going to react. G-span is doing no one a favor.
The perfect storm which will send HB's and real estate into a bear market is getting stronger by the day. The war, high oil, higher interest rates and taxes, incredible overbuilding, massive debt, etc. will make it one of the worst real estate slumps in history.WATCH FORECLOSURES SURGE!!