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Mortgage Rates Pop On Econ News

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Randolph Kinney

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From December low, your mortgage payment just rose by $73 a month on $200,000 loan. So what happens if rates rise to 6%? Hmmm. Prices will fall or sales slow, no?

https://www.cnbc.com/2018/02/02/mortgage-rates-rise-after-positive-jobs-report.html

Boiling the change so far down to a monthly payment, if a borrower took out a $200,000 mortgage in the middle of December, when the average rate was around 3.875 percent, they would have had a monthly payment of $940 (that's not including taxes and insurance). If they were to take out that same loan today, the monthly payment would be $1013.

While $73 a month may not sound like a lot to some, this is just a best-case scenario. Depending on your credit-worthiness, it could be a bigger difference. For some borrowers on the margins, they may no longer even qualify for the loan.

I suspect that as wages rise and the push effect develops on inflation, you will see a pull effect from commodities. The FED has to respond or the rates take off on their own.

Eventually, you will see bonds more competitive than stocks. The market is only down 357 points on the DOW.
 

Riick

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The marketplace is already responding.
Had the very first PMI removal order in many, many, many years.
~~Why remove that lousy Quarter Point of PMI, when you can refinance at a rate cheaper than your current rate, except when you can't.
 

timd354

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Maryland
From December low, your mortgage payment just rose by $73 a month on $200,000 loan. So what happens if rates rise to 6%? Hmmm. Prices will fall or sales slow, no?

https://www.cnbc.com/2018/02/02/mortgage-rates-rise-after-positive-jobs-report.html
It all depends on what else is going on and why rates rose to 6%. All other things being equal, if mortgage rates rise to 6%, prices and/or sales would most likely fall. However, if mortgage rates rise to 6% because the economy is going gangbusters and incomes are rising, then it is possible that home prices and sales may not fall, especially if it appears that mortgage rates are likely to go higher than 6%. While mortgage rates are a very important factor in the real property markets, interest rates are but one factor among many factors that affect the markets
 
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Terrel L. Shields

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Arkansas
The correction in market may cause mortgage rates to fall
 

Elliott

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Apr 23, 2002
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Oregon
There's your problem:

Rate Shock. I've noticed an increase in cancellations.

upload_2018-2-5_19-34-52.png
 

djd09

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Ohio
political+cartoon.jpg
 

Randolph Kinney

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Federal Reserve policy shift is to raise interest rates to 3% from the current 1.5%. The question is, will the FED lead interest rates or follow interest rates?

atlas_SJy2YVABM.png


The Federal Reserve raises the benchmark interest rate in times of economic growth, partly to temper inflation. So far, markets are expecting three interest-rate increases in 2018 from the Fed, after three last year.

We think the inflation narrative in the US will change in 2018, possibly resulting in the Fed—as of today, under new managementadding a surprise fourth rate hike.

https://qz.com/1193682/its-worth-betting-on-a-surprise-us-interest-rate-hike-in-2018/

Corporations and governments that are large debtors will run into problems servicing their debt.
 

jay trotta

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Connecticut
December no Tax changes, rates fairly stable; January Big Tax change, the Public just got a Huge (per DT) raise in income; all happening in a 60 day window.
 

Mr Rex

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The Fed has created a witches brew economically.

http://media-cache-ec0.pinimg.com/736x/b7/CE/37/b7ce37ff10c71b172263278e1fc169c5.jpg
 
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