Investing 102

[Vegas69]

Greg, what is your take on interest rates? Specifically, mortgage rates?

[GregWeld]

Originally Posted by Vegas69

Greg, what is your take on interest rates? Specifically, mortgage rates?

I really don't follow mortgage rates - and couldn't tell you where they stand right now. But what I'm afraid of is that mortgage rates rise after YEARS of them being historically low - and that the consumer can't "afford" or doesn't want to afford the higher rates. Having said that - it might spur people on to get moving and buy a house before they go higher too... so it's anyone's guess. But with the tighter (better) lending standards - I wonder if the two things combined won't be a punch in the gut. Of course this all depends on how FAST they rise.

You're in the front row seat to gauge the consumers reaction to rates - and to how the newer lending standards have affected people's buying. What's your take???

[Vegas69]

I agree that most are conditioned with super low rates. Folks think a 5% interest rate is high. ha I don't think it will take long for most to get past rate as with any installment situation, it's driven by monthly budget.

Here, affordability is still in the zone where it belongs. Buyer's can still afford what they want in most cases. I think we have room for higher rates, just not a drastic change. We are still a slightly seller's market which is one of the factors that backs me up. Depending on market dynamics, I do think a rate jump could result in a healthy adjustment in median price. Much like the stock market, it's a completely different picture than 10 years ago. Qualifying has been hard during the recovery and consumers have the dignity of choice due to the basic fundamentals that didn't exist last time around. Meaning, they can put timing on their side.

[SSLance]

May just dip my toe back in on a few select stocks today...by the looks of things.

It will be interesting to note if buying brings things back up this afternoon or if the selloff continues.

[captainofiron]

I checked my portfolio earlier...



the worse thing is I only have like 200 bucks to buy anything...

[gearheads78]

Several of my long term plays took a big dip today. I wish I had money to buy more.

[captainofiron]

Originally Posted by gearheads78

Several of my long term plays took a big dip today. I wish I had money to buy more.

yea me too, hadnt seen everything in red in such a long time, not to mention almost everything I have was close to a dollar or more in the red...

[GregWeld]

A rate hike appears to be coming.... and the market will have to adjust to that. I would expect more "dips" as people ready themselves for a rising interest rate environment.

While the rate hike has been "expected" for a very long time... the sooner we get it done - the better the market will like it. In the meantime people will be taking gains and locking them in. That's a pretty short sighted view of the market - but it is what takes place. There's no denying that all of us are just along for the ride.

[SSLance]

I did some buying today...sparingly...

I'm thinking I'll get chance to buy more stuff on sale too.

[68Cuda]

Originally Posted by Vegas69

I agree that most are conditioned with super low rates. Folks think a 5% interest rate is high. ha I don't think it will take long for most to get past rate as with any installment situation, it's driven by monthly budget.

Here, affordability is still in the zone where it belongs. Buyer's can still afford what they want in most cases. I think we have room for higher rates, just not a drastic change. We are still a slightly seller's market which is one of the factors that backs me up. Depending on market dynamics, I do think a rate jump could result in a healthy adjustment in median price. Much like the stock market, it's a completely different picture than 10 years ago. Qualifying has been hard during the recovery and consumers have the dignity of choice due to the basic fundamentals that didn't exist last time around. Meaning, they can put timing on their side.

Go look at historical rates from the 80's!
http://www.freddiemac.com/pmms/pmms30.htm

I remember my folks getting into a house at just under 10%.

What is "dangerous" about people shopping at these low rates is they listen too much to the realtors and some buy every bit of house they can "afford". Eight years ago when we moved here my bank told me they would loan me up to a certain amount. When they did my pre-approval letter for the realtor I asked them to drop that number more than 1/2. At the end of the day you still have to heat / cool / and pay taxes on that property! We knew what we wanted and needed, and the number we gave the realtor fit that. And, wouldn't you know, every house she showed us was just at or over that number!