Mortgage rates

alcoholica

Founding Member
I'm what Willis was talking about
Lifetime Member
Jun 11, 2014
16,754
20,381
Founding Member
I did the same thing quite a few years ago. We were all convinced that everything was going to crash with the new socialist President going into office, and that the economy, which had been doing well, was going to tank. I pulled everything out just before Clinton was inaugurated, and kept it out for about 3 years. I missed out on a good chunk of one of the biggest run ups ever.

I’ve been thinking about pulling a significant amount of cash out and sitting on the sidelines, as things look a lot like they are heading into the crapper. But the question is always there, “do I pull my dollars out now, and risk either missing out on a bull run, or having hyperinflation reduce the value of my cash pile to a pittance?” “Do I convert my cash pile to something that holds value better, like precious metals or gem stones?” “Or do I stay heavily invested in equities, along with some real estate, but pull enough to the sidelines that I have something more to recover with should everything else drop by 50, 60, 80% or more?”

To me, these are hard questions, and the closer I get to retirement, the more “correct” I need to be.
I’m just not comfortable in this market. I may be 100% wrong, but I think the whole thing is balancing on a thin edge. It’s the right move for me, which does not mean it’s the right move for you
 

no1g8r

Bringing Reason to the dumb masses
Lifetime Member
Oct 23, 2017
2,407
5,295
I’m just not comfortable in this market. I may be 100% wrong, but I think the whole thing is balancing on a thin edge. It’s the right move for me, which does not mean it’s the right move for you

I get it. I’ve got that feeling again too. Last time I was wrong, and it cost me. But if we’re right this time, and I don’t back out into cash, it could REALLY cost me. So I’m trying to figure out if this is the time, whether to back out partially or fully, and whether cash is the right instrument for money sitting on the sidelines.

Thanks for letting me pick your brain a little bit, and I’d love to know what others think. I’m probably in the wrong thread, though.
 

bradgator2

Founding Member
Rioting
Lifetime Member
Jun 12, 2014
9,507
24,945
Founding Member
Had to get a few things from Home Depot today. I needed 6 8ft pressure treated 2x4s. $10.95 each
 

Bullag8r

Senior Member
Lifetime Member
Jul 24, 2014
2,554
4,461
I’m just not comfortable in this market. I may be 100% wrong, but I think the whole thing is balancing on a thin edge. It’s the right move for me, which does not mean it’s the right move for you

Hey Alchy, we are refinancing with Quicken right now from a 30 year to a 15 year, lowering our interest rate from about 4 to 2.75. We started the process about 10 days ago and will close this Wednesday. We have gone through the process about 5 times in the past 40 years involving 3 different residences and this has been the easiest by far.
 

alcoholica

Founding Member
I'm what Willis was talking about
Lifetime Member
Jun 11, 2014
16,754
20,381
Founding Member
Hey Alchy, we are refinancing with Quicken right now from a 30 year to a 15 year, lowering our interest rate from about 4 to 2.75. We started the process about 10 days ago and will close this Wednesday. We have gone through the process about 5 times in the past 40 years involving 3 different residences and this has been the easiest by far.
And?
 

FireFoley

Senior Member
Lifetime Member
Nov 19, 2014
9,013
14,787
Refi apps down nearly 50%....

I figure nationally it is more than 50%. I have to think anyone who qualified or wanted to refi already has. The refi game is over. So I looked at Rocket Mortgage stock (RKT) and Loan Depot stock (LDI) and both are near all time lows. Neither company has been a public company for that long but considering the housing market, I would have thought they might be performing better stock wise. Clearly as busy as they are does not equal good stock performance. And to make matters worse another Mortgage company is about to go public thru a SPAC backed by SoftBank and Masa Son.
 

alcoholica

Founding Member
I'm what Willis was talking about
Lifetime Member
Jun 11, 2014
16,754
20,381
Founding Member
I figure nationally it is more than 50%. I have to think anyone who qualified or wanted to refi already has. The refi game is over. So I looked at Rocket Mortgage stock (RKT) and Loan Depot stock (LDI) and both are near all time lows. Neither company has been a public company for that long but considering the housing market, I would have thought they might be performing better stock wise. Clearly as busy as they are does not equal good stock performance. And to make matters worse another Mortgage company is about to go public thru a SPAC backed by SoftBank and Masa Son.
I'll try to talk to the Home Loan Officer the next time they swing by. Last I talked to her, she said the rates were climbing, but what was interesting is that they couldn't get loans processed, due to staff shortages. A coworker had been waiting since December on an approval and as of two weeks ago, hadn't gotten one yet. They literally can't keep up with the demand that's been happening, and the hires they've made haven't been able to get up to speed (no surprise). Then you have backed up appraisers and title companies.
 

Concrete Helmet

Hook, Line, and Sinker
Lifetime Member
Jul 29, 2014
22,047
23,183
I figure nationally it is more than 50%. I have to think anyone who qualified or wanted to refi already has. The refi game is over. So I looked at Rocket Mortgage stock (RKT) and Loan Depot stock (LDI) and both are near all time lows. Neither company has been a public company for that long but considering the housing market, I would have thought they might be performing better stock wise. Clearly as busy as they are does not equal good stock performance. And to make matters worse another Mortgage company is about to go public thru a SPAC backed by SoftBank and Masa Son.
It started to decline nationally in March by 32%...As I expected we have been seeing a wave of HELOC's again over the last 6 weeks from all the people who refied 1,2 and 3 years ago who are making another grab before their equity(property value)drops....it won't be long in my opinion before that starts to happen....the plug is being pulled and the bilge pump is on it's last leg....
 

FireFoley

Senior Member
Lifetime Member
Nov 19, 2014
9,013
14,787
Was not sure where to put this info, but when I connect the dots of this report I just do not see how this ends well.

Household debt climbs to $14.64 trillion, due to jump in mortgages and car loans

Consumer debt edged higher during the first three months of 2021, due primarily to a jump in mortgages and auto loans, the Federal Reserve reported Wednesday.

Total household debt balances rose by $85 billion in the first quarter, a 0.6% increase that brought the total level to $14.64 trillion.

Fueled by low rates and a red-hot housing market, mortgage debt swelled in the period by $117 billion, or nearly 12%, to $10.16 trillion, according to the New York Fed’s quarterly Report on Household Debt and Credit. Auto loans increased by $8 billion, to $1.38 trillion, while student debt balances increased by $29 billion to $1.58 trillion, even though many loans are in forbearance granted during the pandemic.

One surprise in the report came from a substantial decline in credit card balances. That level fell by $49 billion in the quarter, the second largest drop since the New York Fed began tracking it in 1999

Credit card balances now total $770 billion, or $157 billion lower than they were at the end of 2019, “consistent with both paydowns among borrowers and reduced consumption opportunities,” the report stated.

ew York Fed researchers said the latest round of declines also was helped substantially by another round of government stimulus checks, this time for $1,400. While retail sales have jumped higher, so has the savings rate as well as the share put toward reducing debt.

The report also noted a general upswing in credit quality among borrowers.

The median credit scare for newly originated mortgages increased to 788 while the score for new auto loans rose to 720. Just 15% of the newly originated auto loans were to subprime borrowers with scores lower than 620.

Delinquency rates also continued to drop, edging lower to 3.1% of all debt, a 1.5 percentage point decline from the same period in 2020.
 

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,221
Interesting article about delinquency rates - it's sort of misleading...it says 'the forbearance did it's job', but then implies that when the grace period ends there could be a rise in delinquencies.

Plunging Mortgage Delinquency Rate Shows Forbearance Is Doing Its Job

When forbearance was initially put into place, homeowners got a 12-month reprieve on paying their mortgages. Forbearance was then extended to last up to 18 months.

But soon, borrowers who put their mortgages into forbearance early on in the pandemic will see that option run out. There's concern that we could then see delinquency rates increase -- and see foreclosure rates boom in the months that follow.
 

alcoholica

Founding Member
I'm what Willis was talking about
Lifetime Member
Jun 11, 2014
16,754
20,381
Founding Member
Interesting article about delinquency rates - it's sort of misleading...it says 'the forbearance did it's job', but then implies that when the grace period ends there could be a rise in delinquencies.

Plunging Mortgage Delinquency Rate Shows Forbearance Is Doing Its Job

When forbearance was initially put into place, homeowners got a 12-month reprieve on paying their mortgages. Forbearance was then extended to last up to 18 months.

But soon, borrowers who put their mortgages into forbearance early on in the pandemic will see that option run out. There's concern that we could then see delinquency rates increase -- and see foreclosure rates boom in the months that follow.

They must not read GC, we've been talking about a looming FC boom for months.

Better get out of big bank stocks now. A rise in delinquency will eventually lead to increases in probability of default, which will lead to increased in loan loss provisions. That's important because you must expense your adjustments to loan loss provisions. This may be different for bundled home loans, but they'll have something similar to reflect the increased risk. In any event, it will directly hit earnings.
 

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,221
They must not read GC, we've been talking about a looming FC boom for months.

Better get out of big bank stocks now. A rise in delinquency will eventually lead to increases in probability of default, which will lead to increased in loan loss provisions. That's important because you must expense your adjustments to loan loss provisions. This may be different for bundled home loans, but they'll have something similar to reflect the increased risk. In any event, it will directly hit earnings.

I wouldn't be surprised to see the Dems push some sort of 'bailout', knowing that the forbearance period 'caused' this pending problem.
 

alcoholica

Founding Member
I'm what Willis was talking about
Lifetime Member
Jun 11, 2014
16,754
20,381
Founding Member
I wouldn't be surprised to see the Dems push some sort of 'bailout', knowing that the forbearance period 'caused' this pending problem.
While I think prices will tank in housing, I don’t think you’ll have the volume or the other factors to create a bailout environment. I hope I’m not wrong there. But I do think this is uniquely a housing price issue, and not a financial and derivatives issue. Besides, a lot of foreclosures will be well secured
 

Users who are viewing this thread

Help Users

You haven't joined any rooms.

    Staff online

    Forum statistics

    Threads
    31,642
    Messages
    1,615,670
    Members
    1,642
    Latest member
    fishermb