US adopts zero interest rate policy

[Admiral Valdemar]

Here is a tidbit of sanity from my little window on the world

Over the past several weeks, despite significant dips in LIBOR and the FED rate, fixed equities I'm dealing with are remaining in the high seven's and low eight percent range, while traditional first position mortgages (Purchase or NO cash-out straight refi's) have dropped under five percent. Granted, HELOCS are are in the three's and fours, but the underwriting guidelines for those have become downright draconian. What does that tell us? Banks (at least mine, and the last remaining investors that will accept a brokered deal) don't want anyone using their house as a ATM machine anymore and are working this into their pricing.

Sounds like a good start, although given the number of people today who see their house as a way of subsidising their lifestyle, along with credit cards, this could hurt a lot of families used to living on more. Like I say, people need to learn to spend only what they can reasonably earn, not by leveraging themselves, like the banks and hedge funds did, and risking major money problems should job security be threatened.

[aerius]

Over the past several weeks, despite significant dips in LIBOR and the FED rate, fixed equities I'm dealing with are remaining in the high seven's and low eight percent range, while traditional first position mortgages (Purchase or NO cash-out straight refi's) have dropped under five percent. Granted, HELOCS are are in the three's and fours, but the underwriting guidelines for those have become downright draconian. What does that tell us? Banks (at least mine, and the last remaining investors that will accept a brokered deal) don't want anyone using their house as a ATM machine anymore and are working this into their pricing.

I guess the big question is a)how many people qualify for those <5% mortgages, and b)how many people are actually buying them? From what I understand, if a homeowner's underwater on his current mortgage he can't refi into a new one at a lower rate anyway so he's still fucked.

[Col. Crackpot]

I guess the big question is a)how many people qualify for those <5% mortgages, and b)how many people are actually buying them? From what I understand, if a homeowner's underwater on his current mortgage he can't refi into a new one at a lower rate anyway so he's still fucked.

If you purchased or refinanced into an >80 ltv product in the last year or so, you are likely shit out of luck. I'd say that 1/4 to 1/3 of the country does not have access to mortgage lending right now because they are either underwater or their credit is fucked. Still, i'm swamped right now, for the first time in months and i'm working from home on a vacation day. If you can PROVE income (40 ish DTI) have a fico over 700 (740+ being better) and the appraisl;[ comes back good (80% ltv) i can do the refi around 5-ish. Purchases we can get low 5's for first time home buyers with 3-5% down, full documentation, same DTI guidelines, A credit.

[Col. Crackpot]

wow, we just went to intra-day rate postings until further notice. Holy volatility, batman!

[aerius]

wow, we just went to intra-day rate postings until further notice. Holy volatility, batman!

Insane isn't it? I was watching the Treasury and bond market action today along with some of the currency markets, today's action made the stuff that was going on in October look stable. Then again it's not too surprising considering that the Fed has zeroed interest rates and is going to start buying T-notes. The Fed is going to drink its own special Kool-aid.

[TC Pilot]

So... if interest rates are at or near zero and banks are tanking left and right... why should I keep anything in the bank?

[SirNitram]

So... if interest rates are at or near zero and banks are tanking left and right... why should I keep anything in the bank?

Positive returns if it doesn't fail, as opposed to 3 month Treasuries and many Money Markets.

Yea, it's really not a good situation.

[TrailerParkJawa]

I guess the big question is a)how many people qualify for those <5% mortgages, and b)how many people are actually buying them? From what I understand, if a homeowner's underwater on his current mortgage he can't refi into a new one at a lower rate anyway so he's still fucked.

If you purchased or refinanced into an >80 ltv product in the last year or so, you are likely shit out of luck. I'd say that 1/4 to 1/3 of the country does not have access to mortgage lending right now because they are either underwater or their credit is fucked. Still, i'm swamped right now, for the first time in months and i'm working from home on a vacation day. If you can PROVE income (40 ish DTI) have a fico over 700 (740+ being better) and the appraisl;[ comes back good (80% ltv) i can do the refi around 5-ish. Purchases we can get low 5's for first time home buyers with 3-5% down, full documentation, same DTI guidelines, A credit.

I was able to get a loan modification from 6% to 5.125% from my credit union. Although, I'm sure if I was borrowing all over again, they might not have let me borrow the same amount. My mortgate is only 6 months old so I'm fortunate I can do this. Many of my friends are already upside down and despite good jobs and cash in the bank they can't refi.

[Col. Crackpot]

I was able to get a loan modification from 6% to 5.125% from my credit union. Although, I'm sure if I was borrowing all over again, they might not have let me borrow the same amount. My mortgate is only 6 months old so I'm fortunate I can do this. Many of my friends are already upside down and despite good jobs and cash in the bank they can't refi.

the only warning i can give about loan modifications, is beware of your lender resetting your amortization schedule.

[aerius]

the only warning i can give about loan modifications, is beware of your lender resetting your amortization schedule.

And make sure they don't turn your mortgage from non-recourse to partial or full recourse. If your mortgage gets turned into a recourse loan, then if you lose your job in the future and end up defaulting the bank can come after you and garnish your future wages till they get all their money back. Non-recourse means if you default you lose the home and your credit score takes a big hit and that's where it ends, the bank is shit out of luck.

[TrailerParkJawa]

the only warning i can give about loan modifications, is beware of your lender resetting your amortization schedule.

And make sure they don't turn your mortgage from non-recourse to partial or full recourse. If your mortgage gets turned into a recourse loan, then if you lose your job in the future and end up defaulting the bank can come after you and garnish your future wages till they get all their money back. Non-recourse means if you default you lose the home and your credit score takes a big hit and that's where it ends, the bank is shit out of luck.

Thanks for the tips guys. Nothing changes expect for the rate and they fees are very reasonable. I'm fortunate to have a pretty good credit union.