tuscl

Mortgage rates and home prices

mark94
Arizona
Tuesday, February 6, 2018 8:08 AM
Home values, the largest investment for most people, have done well recently. But, now we are seeing mortgage rates rise. At 4.25%, they are historically low. But, that’s still more than 3.75% not long ago. There seems to be a rush for both buyers and sellers to complete transactions quickly before rates rise further. I’m curious to see what happens to home prices as rates rise. At first blush, home prices should flatten or drop with higher rates. But, I expect there will be fewer homes for sale as owners want to keep the low rates in their current mortgage. And, with a strong economy, millennials may be ready to buy.

56 comments

  • shailynn
    •
    6 years ago
    Millennials want to stay at home so their moms can still cook them breakfast and tuck them in at night.
  • Dominic77
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    6 years ago
    Plus the millennials’ moms fold and do their laundry. Who’d want to give all that up for freedom and independence?
  • Lurker_X
    •
    6 years ago
    I bought my first home in the late 1990s. Wanted to get 7.25% and watched rates moving up and felt some sense of urgency to apply and close. Settled on a 7.375% adjustable. Refi'd 2 years later to a 6.625% 15 year fixed and thought that was "pretty good"
  • san_jose_guy
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    6 years ago
    I think it has been federal policy to keep interest rates very low to provide economic stimulus, a need likely measured by the unemployment rate. And home mortgages, are the lowest interest rates, the closest to the source so to speak, that most people will ever see. But low interest rates, just like the mortgage industry itself, have been a huge factor behind skyrocketing home prices, going back to their acceptance, going back I think to the 1930's. When you see threats of high inflation or high economic instability and default rates on the horizon, then interest rates will climb, and home prices will probably start to deflate. SJG Bro Topia, Emily Chang [view link] [view link] [view link] Brotopia: Breaking Up the Boys' Club of Silicon Valley, Emily Chang Heinrich Cornelius Agrippa [view link] Three Books Of Occult Philosophy [view link] [view link] [view link] Taliesin McKnight, Tyler Texas Secrecy & the Occult: Is it Important? [view link] Spirit Summoning Procedures & Advise - Ceremonial Magick 101 [view link]
  • Cashman1234
    •
    6 years ago
    I’m not sure the op has factored the change in the tax environment taking effect in 2018. Since the state tax deductions are limited/capped - that may stop folks from trading up (even though mortgage rates remain historically low). It may also decrease the desire for millennials to own a home. The older generations may opt to rent as they become empty nesters (depending on their tax situation). It will be a different situation for many now, and seeing how folks react will be very interesting going forward.
  • daddyfatsack
    •
    6 years ago
    Got damn the millennials comments are beyond stupid and lazy. Hope those were jokes but they probably weren't. And I'm not even a millennial.
  • RandomMember
    •
    6 years ago
    Slightly off topic, but interest rates had almost nothing to do with the housing bubble of 2008. And the housing bubble had nothing to do with government lending to the poor (which is an argument I've had with several Randoids on the board). We bought a pretty custom home in foreclosure at the end of 2009 and financed with 30-yr fixed at 3 1/8%. We'll never see that rate again in our lifetime, so it's very likely that we're here for good. In my experience housing prices are not all that sensitive to interest rates; the local job economy and the expectation of price appreciation is much more important.
  • shailynn
    •
    6 years ago
    daddyfatsack - of course you're not a millennial, if you were you'd be playing video games or whining about something on Reddit right now. The data backs it up, millennials are the biggest generation to still be living at home with their parents. They make excuses, like the economy, housing costs too high, no good jobs, but for real, they just want to be tucked in at night by their moms. SJG - you have to own a home and not live in your mom's basement to comment on this thread. See, SJG is just like a millennial, only a 58 year old version.
  • Clubber
    •
    6 years ago
    Beware! The housing market and what can happen. Thanks to the idiotic policies of the left and their denial of a problem, I give you the financial collapse of '07-'08.
  • twentyfive
    •
    6 years ago
    ^^^Really seems to me that GHWBush presided over that one with the Republican Congress, speaking as a true centrist who has actually voted both D & R numerous times. Let’s have an honest discussion, without the attempted rewriting of history or twisting of facts.
  • twentyfive
    •
    6 years ago
    ^^^sorry that should have been GW Bush
  • anthonyu
    •
    6 years ago
    From twentyfve: "^^^Really seems to me that GHWBush presided over that one with the Republican Congress, speaking as a true centrist who has actually voted both D & R numerous times. Let’s have an honest discussion, without the attempted rewriting of history or twisting of facts." +1
  • Dominic77
    •
    6 years ago
    @Clubber, wasn’t the rising housing prices fueled by families is a bidding war against competing families for housing beginning with white flight? Otherwise why did the prices keep rising and why did people pay the higher prices? Unless you’re arguing the tied memes about the loans and the Carter Administration.
  • Dominic77
    •
    6 years ago
    I’m not saying that NO progressive policies where at fault here. Just the make that point clear.
  • twentyfive
    •
    6 years ago
    See now here’s the problem when I speak with the ideologues on both sides of the spectrum they all blame the other side, but when I speak with financial people they can point out that there’s more than enough blame to go around. The loose oversight of the banks the greed of the bankers, let’s not forget just plain stupidity of these folks earning an hourly wage being led to believe that they could afford a palace, there is so much that caused the housing crash, and the main culprit was GREED by all involved.
  • Dominic77
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    6 years ago
    How about greed (from many or all) plus good intentions (from a few)? I don’t think I was giving enough credit to the greed.
  • twentyfive
    •
    6 years ago
    @Dominic77 white flight started way before any of this and really didn’t fact into this particular crisis, plenty of minority’s were involved in the housing crisis. Both as buyers, sellers, and just as greedy as everyone else.
  • Dominic77
    •
    6 years ago
    Oh, you’re talking about the mortgage derivatives in ‘00s where they were sliced and diced, laundered, then sold without regard to risk. Duh. I don’t have a dog in this fight. I’m arguing the wrong thing. Duh.
  • Dominic77
    •
    6 years ago
    ... and the subprime loans, buyer without a large down payment, interest only loans, non-fixed rate mortgages ... plus the buyer, banker, investors, and government greed. I was just focusing on the prices.
  • Cashman1234
    •
    6 years ago
    There was greed on the part of bankers, and politicians. The relaxing of loan/mortgage requirements played a big role too. The idea of helping more Americans to afford home ownership wasn’t a bad thing. It’s basically helping certain folks (who might not qualify) to get a mortgage and have a home of their own. The exploitation of the relaxed standards is where the problems began. There were folks buying huge homes that they couldn’t begin to afford. It ruined the borrowers credit - because they had to default or file bankruptcy - both of which are a mess. On the consumer side - folks lived above their means - and that bubble had to burst. The commercial issues were awful too. Too many folks buying devalued properties - never doing any improvements - and expecting to turn them for a profit. When they didn’t appreciate - they would dump them - just stop making payments and let the lender sue to recover the losses. It was a very bad situation - and there’s a lot of blame to go around. Politicians, business heads - and the consumers who got in over their heads!
  • BurlingtonHoFactory
    •
    6 years ago
    I happen to think it's silly to blame  greed. What exactly does greed mean anyway? I think it just means wanting to acquire more money than is necessary to keep yourself and your family alive and healthy. Well, by that definition, aren't we all greedy? Isn't greed a constant feature of humanity? Blaming greed is like blaming human nature. It's like when people blame "hate." These impulses are a constant in human history. You might as well complain about having only two arms and two legs while you're at it. As for politics, a little history lesson: Democrats had just won a massive victory in 2006, retaking both houses of congress in a wave election and effectively putting an end to the Bush Administration's future policy plans. Before that, congress was held by Republicans since 1994. Prior to '94, the Democrats had solid control of the House going all the way back to the 1950s. During this period, the White House also changed party hands frequently, and most presidents intervened in the housing market. FDR created Fannie Mae; LBJ gave us HUD; Nixon gave us Freddie Mac; Carter presided over the Community Reinvestment Act; Clinton insisted that Fannie and Freddie each increase their subprime portfolio; and then GW Bush bailed out the financial sector after all this malinvestment predictably collapsed. Ronald Reagan was the only post-war president I'm aware of who did anything at all to discourage real estate investment: the 1986 tax reform took away some tax breaks for investment property, prompting Donald Trump to angrily denounce Reagan at the time. (I'm not sure if Trump ever called Reagan a loser, but it wouldn't surprise me LOL.) The lesson you should learn from all this is that incentives matter. If losses are socialized and gains are privatized, then you have an incentive to take lots of risks. And that kind of system can only be put in place by the government. The banks were responding quite rationally. If you were a banker and if the government came to you during a housing boom and asked you to make more garbage loans, and not to worry because they'll buy most of them from you anyway, you would probably go along with their request. Do you think you would be the last intellectually honest person alive and turn down seemingly free money? Please, don't make me laugh. And let's also not forget that many of these financial institutions got exactly what they deserved in the end anyway, regardless of the government's attempt to socialize their losses. Lehman, Bear Stearns, AIG, Merrill, etc: they all suffered horrific losses and/or ceased to exist. So what more do you want?
  • twentyfive
    •
    6 years ago
    BHF greed is real, try to remember Bulls make money, Bears make money, Hogs get slaughtered! The meaning is very simple, don’t bite off more than you can chew.
  • mark94
    •
    6 years ago
    Every now and then, a truly horrible piece of legislation or regulation comes along that ignores a rule of nature, like trying to ban the law of gravity. By requiring banks to extend loans to people with miserable credit, the federal government pretended that people who had refused for their entire lives to pay their bills would suddenly acquire financial discipline and responsibility. It wasn’t going to happen.
  • RandomMember
    •
    6 years ago
    What would we do without @Mark93 reciting what he hears on Fox News? The old zombie theory that government lending to the poor caused the housing crisis. No matter how many times that idea is thoroughly discredited, it comes back to life. Again and again and again... The facts are: (1) The housing crisis happened at exactly the same time as the market share of risky mortagages made by wall-street exploded. The default rate of mortgages made by private lenders on Wall Street was six times that of Fannie & Freddie during the crisis period. The timing of the housing crash didn't correlate at all with the Community Reivestment Act of the early 90s. (2) Commercial real estate had an even more pronounced boom and bust during the same period -- and had absolutely nothing to do with lending by Fannie and Freddie. (3) A similar boom and bust in housing occured in countries all over the world during the same period. It was *unregulated* securitization that caused the financial crisis. And it was government intervention that saved us from catastrophe. It's hard for Libertarians to grasp the fact that unbridled capitalism led to such misery; it's at odds with their Ayn Rand novels. There are certain topics that are about morality. For example, the question as to whether the government should subsidize health insurance for the poor. I can understand disagreement about something that's based on morality. However the cause of the housing bubble is simple, fact-based, and indisputable. Unregulated securitization caused the financial crisis.
  • RandomMember
    •
    6 years ago
    " Lehman, Bear Stearns, AIG, Merrill, etc: they all suffered horrific losses and/or ceased to exist. So what more do you want?" ______________________ This is such a patently ridiculous statement, @Burlington. Republican Bernanke knew that we had to bail out these companies at taxpayer expense to prevent a complete financial meltdown. And a decade of misery followed the housing collapse. What I want is leaders who understand the cause of the financial crisis so that it doesn't happen again.
  • BurlingtonHoFactory
    •
    6 years ago
    Well, I don't agree. But to take things point by point: "The housing crisis happened at exactly the same time as the market share of risky mortagages made by wall-street exploded." Right. You should ask yourself why this happened in the first place. "The default rate of mortgages made by private lenders on Wall Street was six times that of Fannie & Freddie during the crisis period." I've never heard this statistic but I'll accept that it's true. Just remember, the GSEs don't generally make loans, they just buy them from private banks. If this statistic is accurate, it just means that the tranches that were originated last (in other words, the ones that hadn't been sold to Fannie and Freddie yet, and therefore were still on the banks' books) were the lowest quality. This comports with much of what I've read and heard. After all, by 2007 all the low hanging fruit had already been picked and the new mortgages were mostly garbage. "The timing of the housing crash didn't correlate at all with the Community Reivestment Act of the early 90s." Well, the CRA was in the late 70s, and it certainly didn't precipitate the crisis on its own. "Commercial real estate had an even more pronounced boom and bust during the same period" Commercial real estate is very sensitive to the health of the economy. Residential real estate tanked the economy and took commercial down with it. "A similar boom and bust in housing occured in countries all over the world during the same period." America sneezes and the world gets a cold. The international boom in real estate was part of a multi-year hard asset bull market that also saw gold and oil prices skyrocket as paper assets stagnated. Then, when real estate prices began collapsing in America (something everyone was told "couldn't happen" for some reason), banks began to reevaluate their risk portfolios and international lending contracted as a result. American financial markets are some of the most important in the world, so we would have had a big effect on the rest of the world even if it weren't for this new "risk-off" sentiment. "It was *unregulated* securitization that caused the financial crisis." I'm curious, which regulations do you believe were repealed that led to this mess? Or which new regulations do you believe are keeping us from having another meltdown now? "And it was government intervention that saved us from catastrophe.... [But]... a decade of misery followed the housing collapse." That's a bit contradictory, no? They saved us but something terrible happened anyway? How bad do you think it would have gotten without government intervention? A century of misery perhaps? "What I want is leaders who understand the cause of the financial crisis so that it doesn't happen again." Yes, on this we really do agree. We just completely disagree on the causes of the crisis. And actually, I still think there's a clear moral dimension to this issue as well. I think it's immoral for the government to take your money and use it to buy my mortgage to encourage me to own a house. And I think it's immoral for the government to take more of your money and use it to bail out the bank that loaned me the money in the first place. That would be immoral. The point is that I believe the government should represent the best of us. But it always represents the worst in us instead. The government shouldn't steal, or be bigoted, or be unnecessarily violent. It shouldn't put its thumb on the scale for anyone, and it shouldn't gamble with our money. In other words, for every issue, there's always a moral dimension and the government always fails the moral test. At least by my standards.
  • twentyfive
    •
    6 years ago
    Once again people it wasn't a housing crisis, it was a credit crisis, leading to a financial meltdown of the economic system. Really, know what you are talking about, the damn thing was about credit, plain and simple.
  • RandomMember
    •
    6 years ago
    . @Burlington what you're ignoring is that in 2006 over 80% of subprime mortgages were made by PRIVATE originators who were exempt from government regulation. The chain went like this: (1) private originators underwrote bad, subprime, loans and didn't give a shit about the underlying quality. (2) These private originators unloaded the bad loans on Wall Street firms who chopped them up into securities. (3) The rating agencies gave the securities AAA ratings. (4) Unsuspecting institutional investors bought the securities because the rating agencies gave their stamp of approval. If you don't agree with these facts, there's really nothing else to discuss. The $2Trillion in subprime loans made by private originators dwarfed the losses at Fannie and Freddie. So it's a myth to say the government created the financial crisis. The crisis would have been far worse if the Fed had not bailed out Bear Sterns, AIG, etc... Letting Lehman fail was an experiment, and it was obvious that letting these other institutions fail was not an option. The govenment had to step in; there was no choice. You seriously feel the bailout was immoral? The root cause could probably be traced to the repeal of Glass-Steagall and the unregulated nature of derivatives (which allowed AIG to insure trillions of dollars without any reserves). I'm not an expect, but I think you can trace both to the Clinton administration. The whole episode was a colossal example of why unbridled capitalism can lead to disaster.
  • BurlingtonHoFactory
    •
    6 years ago
    @ Randommember said: "... over 80% of subprime mortgages were made by PRIVATE originators who were exempt from government regulation." It's actually closer to 100% because, remember, the GSEs don't really make any direct loans themselves. But I don't want to nitpick, I know what you mean: there are loans that the GSEs will buy right away and then there are loans that they will buy later on, "in bulk," if you will. The former are higher quality. You also said "If you don't agree with these facts, there's really nothing else to discuss." Yes, I do agree that all four of these things happened. I'm just saying that other things happened, too. Namely, the GSEs and the Federal government demanded a reduction in the overall quality of loans by mandating an increase in the number of risky loans. In order to facilitate this request, originators had to get creative with NINJA and No-doc loans, etc. It was very profitable for a while, obviously, so no one complained (plus there was always the implication that real estate is backed by the government itself, so it can't decline in value and it can't fail). You don't have to believe me. I'm going to post two quick articles, one from Carol Leonnig at the Washington Post and the other from your two favorite economists, Steve Moore and Larry Kudlow at CNBC. For some background, Leonnig is a Pulitzer prize winner who uncovered Virginia Republican governor Bob McDonnell's bribery scheme and made a name for herself investigating Guantanamo abuses. (In full disclosure, she also helped uncover the Solyndra scandal, but I think it's fair to say that she is more on the left-leaning side of the spectrum.) The point is that by reading these two brief articles, you'll notice that all three writers basically agree that government incentives and mandates were the catalyst for the crisis. Yes, the Kudlow/Moore article is a political document because both were totally in the tank for Trump. And yes, Leonnig also indicates her belief that regulation or lack of regulation was a factor; Kudlow and Moore disagree, of course. But it sounds like the deregulation that you and Leonnig are referring to are the NINJA and No-doc loans. The thing is, there was never a specific legal provision that allowed or disallowed these things; they were an "innovation" that was needed in order to comply with Federal demands for lower quality loans; without them, the government wouldn't have gotten the policy outcomes that it wanted. And lastly, you said "The root cause could probably be traced to the repeal of Glass-Steagall and the unregulated nature of derivatives (which allowed AIG to insure trillions of dollars without any reserves). I'm not an expect, but I think you can trace both to the Clinton administration." I don't see how the repeal of Glass-Steagal is responsible for this. And in fairness, yes, Clinton signed the Gramm-Leach-Bliley act, which effectively repealed Glass-Steagal, but the repeal was written and sponsored by three Republican congressmen. Anyway, Senator Phil Gramm himself famously defended his repeal bill by pointing out two key points: First, Europe never had anything equivalent to Glass-Steagal provisions, so why did the problems begin in America and not in Europe? And second, Gramm-Leach-Bliley allowed Investment banks and commercial banks to merge and therefore diversify their businesses. This was something that Glass-Steagal had previously banned. After the repeal, the depository/commercial banks could now diversify and take on more risk by opening an investment banking division, while investment banks could reduce their risk by taking on a boring depository/lending division. If you think about it, this worked perfectly well because some of the least diversified institutions failed (like Lehman brothers and Bear Stearns, which had never merged with a commercial bank) while some of the most diversified firms survived and thrived (like Chase, which had both an investment banking division and a commercial banking division at the time of the financial crisis). In fact, one of the government's solutions during the crisis was to actually force a risky investment bank to merge with a safe commercial bank, namely the Merrill lynch merger with Bank of America. Anyway, these are the two articles. Let me know what you think: [view link] [view link]
  • RandomMember
    •
    6 years ago
    @Burlington wrote: "the GSEs and the Federal government demanded a reduction in the overall quality of loans by mandating an increase in the number of risky loans." _________ To repeat, the vast majority of subprime loans underwritten during the housing bubble were made by non-bank, private, originators who were completely exempt from government rules and regulations. These private originators sold junk loans to Wall-Street -- not the GSEs. So explain to me why GSE policy is responsible for the meltdown? Can you concentrate on the question and avoid writing another 1000-word essay?
  • RandomMember
    •
    6 years ago
    @Burlington: AIG wrote something like $3Trillion in unregulated credit-default swaps with zero reserves to back it up. Unregulated thanks to Greenspan who is, presumable, one of your Libertarian heroes. As a Libertarian, do you think the government should have bailed out AIG? Or should we have let the whole financial system unravel? Seriously, I'm curious to understand the Libertarian take on this question.
  • BurlingtonHoFactory
    •
    6 years ago
    @RandomMember , Well then, I'll try to be brief. First, you're wrong that non-bank lenders weren't subject to regulations. Yes, their set of regulations were somewhat different than the regulations for traditional banks, but their lending guidelines were and are basically identical. So far as I know, a FNMA loan is a FNMA loan is a FNMA loan: it doesn't matter who originates it, it still has to conform to FNMA's guidelines. Second, non-bank originators definitely did sell junk loans to the GSEs. It's a myth that only big banks can sell to Fannie and Freddie. Countrywide Financial did it. So does LoanDepot and Quicken Loans. Countrywide sold crap mortgages to Fannie and Freddie for many years before the crash, then it got bought out by Bank of America (which is now on the hook for the resulting penalties). Don't believe me? Here's some links: [view link] [view link] And here's another article entitled "The mortgage market is now dominated by non-bank lenders": [view link] This quote from the above article sums it up nicely "Prior to the financial meltdown, loan-guarantee fees charged by Fannie Mae and Freddie Mac were substantially lower for banks compared to non-banks, but as part of the financial reform, those fees are now similar for all types of lenders." In other words, Fannie and Freddie charged nonbank entities higher fees, but it never turned away their business. I don't know why people believe otherwise. As for AIG, just because regulations fail to account for every event, that doesn't mean that there weren't significant regulations in place. Trust me, insurance and finance are one of the most heavily regulated industries that exist. If I'm not mistaken, the Gramm-Leach-Bliley Act empowered the Federal Reserve to regulate financial service holding companies, but AIG didn't qualify because it never availed itself of the opportunities that were afforded to it by the repeal of Glass-Steagal (in other words, it never merged with a bank). That's my understanding of the issue anyway. I like Alan Greenspan, he's okay, but I want to be clear: when Greenspan showed up for work he didn't show up as "Alan Greenspan the libertarian ideologue." He showed up as "Alan Greenspan the Federal Reserve Chairman." In other words, he did his job according to the rules that were laid out for him; he said this publicly several times. If you're a pacifist who joins the military and they tell you to shoot people on the battlefield, well, you're just going to have to shoot people. Otherwise you're not going to be in the military much longer. And if you're a libertarian who gets hired by the Federal government to artificially set interest rates and regulate financial institutions... well, you get the idea. And lastly, no, they never should have bailed out AIG. Or anyone else. Ever. The role of government is to protect you from violence, fraud, and coercion - not from high unemployment or market uncertainty. I just don't believe that the entire financial system would have unraveled. There would have been pain, to be sure, but it would have ended eventually. That's my opinion. (So much for my promise to be brief.)
  • BurlingtonHoFactory
    •
    6 years ago
    ^^^ To be more logical and readable, I probably should have put the second point first and the first point second, but I'm sure you get the idea.
  • twentyfive
    •
    6 years ago
    @BHF you are conveniently forgetting that there was a whole contingent of non bank brokers originating the so called liar loans, which most charter banks wouldn’t or couldn’t touch, as a matter of fact after the crash and ensuing credit crunch it was discovered that these originators were purchasing leads that were refused loans by the tier one originators. They not only were complicit in the subprime meltdown but actively coached noncreditworthy applicants around the regulations that were in place.
  • mark94
    •
    6 years ago
    The average rate for the benchmark 30-year fixed mortgage is 4.33 percent, up 10 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 3.96 percent.
  • RandomMember
    •
    6 years ago
    @Burlington: I guess your debate style is to deflect the central question over and over. For the last time, the vast majority of subprime loans were originated by private companies and sold directly to Wall Street. The vast majority of subprime loans were processed through a chain that had NOTHING TO DO WITH THE GSEs! Do you understand? Maybe recite the last senstense 15 times. Private originators sold crap loans because they could make money and offload any responsibility to Wall Street, who would then securitize the crap loans. You're not convincing me or anyone else; rather you're convincing me that hard-core Libertarians can't look at the financial crisis rationally because it results in cognitive dissonance. AIG wrote $3 trillion dollars of credit default swaps, creating a hopelessly complex web of financial interactions. How could you possibly know the damage that might of resulted from letting AIG fail? Luckily we had a master like Bernanke (a Republican) who recognized that bailing out AIG was the right thing to do for ordinary Americans, even though it created moral hazard. AIG payed back most of the money, anyway. I do enjoy the conversations, @Burlington, and sometimes we agree. It helps crystallize my own opinions on important issues like this one an health care. However, it also reinforces my impression that hard-core Libertarian beliefs are much closer to a cult-like religion that anything rational or practical.
  • RandomMember
    •
    6 years ago
    Pecking this out on my phone. I did see the perfect girl for you Burlington on SS. 1st year law student, Colombian and stated in her profile that she reads An Rand novels. I told her she should intern for Paul Ryan but she didn't seem to understand the reference. She would be perfect for you, Burlington
  • RandomMember
    •
    6 years ago
    sA
  • BurlingtonHoFactory
    •
    6 years ago
    @twentyfive, I'm not ignoring this at all - I'm acknowledging it completely. The actions of banks AND non-bank lenders were directly responsible for the financial crisis, but they did what they did specifically because of Federal policy and Federal dictates. That's not just my opinion, read some of the links I posted. Decide for yourself.
  • twentyfive
    •
    6 years ago
    ^^^read then years ago doesn’t change anything these are basically puff pieces written to push a specific POV there are tons of evidence to the contrary and I really don’t have the patience to look it up and quote specific instances but your argument is severely missing many key points.
  • Dominic77
    •
    6 years ago
    As an outsider (me) looking in, @BurlingtonHoFactory doesn't see greed as a bug but a feature?
  • BurlingtonHoFactory
    •
    6 years ago
    @twentyfive, So you're telling me that CNN and the Washington Post are writing puff pieces in support of free markets? That's a new one.
  • BurlingtonHoFactory
    •
    6 years ago
    @Dominic77, Not really. I'm saying that greed is as much a part of reality as gravity is. Gravity gives us some good things and some bad things. Greed also gives us some good things and some bad things. But it's as pointless to write a law against greed as it is to write a law against gravity. And it's as pointless to blame greed for the crisis as it is to blame gravity for a child falling while trying to climb a tree.
  • BurlingtonHoFactory
    •
    6 years ago
    @RandomMember, I am directly answering your questions. I'm not deflecting anything. Yes, non-bank lenders sold to Wall Street. But they also sold plenty to the GSEs. And banks did basically the same thing. Plus, when FNMA changed its guidelines as a result of Federal policy, the response from market participants was "Well, if it's safe enough for Fannie then it's safe enough for me." But they were all responding to Federal policy from the very beginning of the crisis. And that policy stated that more risky borrowers should receive loans. In fact, those lenders who didn't make enough risky loans often found themselves in the government's crosshairs, accused of "redlining" and violations of Federal Fair Housing regulations. But in order to make all these bad loans pass muster, the lenders had to get creative. Hence, the liar loans and no-doc loans, etc. All of this started with Federal policy. Listen, you don't have to believe me. But you're telling me that you don't believe me AND CNN AND The Washington Post AND CNBC AND Reuters and whatever other links I posted above? Well, if that's the case, I have to wonder what kind of cult *you* belong to! Even people who dislike capitalism and hate the banks seem to nonetheless acknowledge that it was government policy that created these perverse incentives in the first place. Does that mean that capitalism is perfect and that it would always get everything right in the absence of government intervention? No, of course not. But the government has a much worse track record. Furthermore, I can't fathom this idea that you seem to have that banks and non-bank lenders aren't regulated enough. Haven't you ever applied for a mortgage? Or do you know anyone who's ever had a mortgage? I've personally seen mortgage applications for FNMA loans and non-FNMA loans, for bank loans and non-bank loans, both before and after the crisis of 2008, and I can tell you, there is and always has been a *mountain* of paperwork involved. A thousand pages or more. About two thirds of the pages are in direct response to Federal and State regulations. I mean, if you've ever gotten a mortgage, what did you think all that paperwork was? Love-letters? Lastly, I would never claim to know for certain what would have happened if we would have let the banks and AIG fail. I *think* I know what would have happened, but I can't know for sure. I *think* we would have had a very sharp and painful depression/recession that would have lasted about two years, followed by a return to cautious normalcy. Instead, we got about four years of misery, followed by a return to cautious normalcy, plus moral hazard and a decade of slow economic growth. I could be totally wrong about the outcome of letting these companies fail, but it wouldn't change my mind because it's still immoral to take one person's money by force and use it to prop up someone else. (Yes, even if *everyone* would somehow benefit from this arrangement, it's still wrong.) Alcohol and tobacco kill lots of people every year. That doesn't make me want to ban them. And people use guns, knives, hammers, and baseball bats to kill and injure lots of people, all the time. But I still don't want to ban any of them. And if drugs were legalized, surely *someone*, somewhere, would try heroin who otherwise wouldn't have, and maybe he would die from an overdose, and that's sad. But I would still legalize drugs. The reason is simple: I want to live in a free society. Not anarchy. Not Somalia. Not chaos. Just a free society where you can do whatever you want as long as you don't hurt other people. And freedom means that we accept some personal risk. I apply basically the same line of thinking to the banks and the crisis. They did what they did. They made billions off of Federal policy for years. And then it all fell apart. So they should have faced the consequences. That's my view. Reasonable people can disagree. Your moral standards may be very different than mine, and that's fine. But that doesn't mean that you can rewrite history and ignore agreed-upon facts. And the facts are clear: the government's fingerprints are all over the crime scene.
  • twentyfive
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    6 years ago
    It isn’t so new, and they spin things depending where they feel they need to be to attract an audience.
  • twentyfive
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    6 years ago
    What’s really more relevant is where we are now, and truthfully our ability to make informed decisions has been harmed lately, with all of the spinning that takes place on all sorts of media. There is so much bullshit out there and it is unrelenting 24 hours a day now matter how odious a point of view is you can find someone to back it up.
  • azdd
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    6 years ago
    Great discussion! I'm just happy to be at 3.00% on a 15yr fixed rate, anxious to get it paid off! Loved The Big Short movie, especially the part where Steve Carrell is shocked to learn that his stripper has five houses!
  • RandomMember
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    6 years ago
    Anyway, @Burlington, you're a little nutty like @SJG -- but I happen to like both of you. There's nothing worse in life than being apathetic. You should check out Seeking Arrangements and find yourself a cute Libertarian babe. The two of you can read Ayn Rand novels together and procreate little libertarian babies. Peace :)
  • RandomMember
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    6 years ago
    Loved The Big Short movie, The book is even better!
  • Bj99
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    6 years ago
    I think interest rates for homes will stay lower than the historic highs, bc banks don’t have to make as much money from them anymore. Home buying does seem to be a sort of permanent economic stimulus, and banks are able to take advantage of the higher quantity of loans at lower rates. No one stays in their home for 30 years, so the back end of most mortgages, when the loan doesn’t really make any money, never happens. Ppl put a lump down, and then pay for the first five years, and then move, or refinance.
  • BurlingtonHoFactory
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    6 years ago
    @RandomMember, Well that's an amusing little way to shut down an argument. Fair enough. We'll have to agree to disagree. But as far as I can tell, the only things that SJG and I have in common are that we both believe in extreme ideologies and we both never shut up. Beyond that? I can't imagine SJG ever admitting even the vaguest possibility that he could be wrong about anything, whereas I admit this all the time. Plus I would never threaten violence. Oh, and I'm also a real person with real strip club reviews. By contrast, SJG is more akin to a disembodied voice, I think. He's a smart guy, but on some level... he just isn't real. It's like an elaborate skit. Anyway, I read what you wrote about the Colombian girl on SA. Slightly off-topic, but I went through a Latina phase about 10 years ago. I eventually outgrew it; there really was a cultural barrier. Even the most well-educated immigrant just won't get most of my jokes or cultural references, making conversation difficult. It doesn't change my opinion about immigration or immigrants at all, but I usually won't date them or even get lap dances from them. It's just a personal preference. If she were second or third generation, that would be different.
  • BurlingtonHoFactory
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    6 years ago
    A quick note on interest rates: They will definitely go up, but the extra demand from China and other developing countries will keep rates somewhat lower than they otherwise would have been. If we had these current market conditions, say, in 1960, before China's reforms, long-term rates would be 10% by now. Instead, 4% feels high to us. That's probably the reason for the old inverted yield curve and Alan Greenspan's so-called conundrum. I have no idea how high rates will go, but I do know that they would have been higher without China. The increased market liquidity and efficiency brought about by modern technology probably also helps to keep rates somewhat lower than they otherwise would have been.
  • BurlingtonHoFactory
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    6 years ago
    ^^^ By "demand from China," I meant demand for bonds.
  • Dominic77
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    6 years ago
    @BHO said, “I happen to think it's silly to blame greed. What exactly does greed mean anyway?” “I'm saying that greed is as much a part of reality as gravity is.” ^I disagree on a unified field theory definition of greed. I understand there might be two types of greed. 1. The first type is the win-win type. The self-interest and competition are important economic factors type of greed. This is what @Adam Smith called the invisible hand in his Wealth of Nations book, which guides resources and talents to their most valued use. 2. The second type of greed is zero-sum. This is the type of greed Jesus and Scripture commanded us against and appears in church teachings as one of the Seven Deadly Sins. God warns in Isaiah 5:8 that a life build on continuous expansion & upward mobility is one that is unjust because it fails to account for the needs of one’s neighbors. A few people noted that living a life of greed ultimately leads to isolation, simply because as we expand our territory we simultaneously push others away. This greed is a type of Sin because when I get something, my neighbor lose something, so I have harmed my neighbor. That make it a graven Sin. I think some of the fuckers that blew the credit market apart fell into Category #2 more than Category #1.
  • mark94
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    6 years ago
    A survey is out showing what will happen when mortgage rates hit 5% ( now approaching 4.5%). One quarter would stop looking for a home while one fifth would speed up the process. If you run the numbers, the change in rates will have a big affect on investors in rental properties. A property that now generates profits at 3.5% might be a cash sinkhole at 5%.
  • Lurker_X
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    6 years ago
    Has RandomMember forgotten the W administration pushing the "ownership society" mantra? There was a clear Federal push in the early 2000s to get more people into home ownership. The theory was that they would become more responsible and stable citizens than as renters. And there was an effort to loosen FHA guidelines (3% down) in order to compete with the private market which was churning out all the alt-paper / stated income junk. Random could be right that most of the real crud was pumped through to bond securitzation. But stop saying the government was not encouraging it. Sheesh.
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