Investing

[Tigeraholic1]

1 hour ago, gehringer_2 said:

Costs of services keep going up because wages are at the bottom end are rising, which at least is a good thing for those folks. If any large number of undocumented are expelled that will only increase upward pressure on entry level service salaries, so I'd expect the trend to continue. The 25 basis points probably won't have much effect on any of that either way. Interest rates have more effect on the capital intensive parts of the economy but services tend to be low cap. I'd like to see the Fed unwind more of their balance sheet, which is also a deflationary tactic, but since doing more of that puts pressure on bank profits I'm not holding my breath.

NPR said this morning the bottom end of income increase after inflation was 1.2%. I am sure those folks are counting all the extra money like Scrooge Mcduck! 36K salary would give you a whopping $36 pre tax a month. Now exporting illegals would help pressure that income up in some sectors for sure.

[Hongbit]

As usual, Powell talks and bad things happen.    

[Deleterious]

He said they were going to pump the brakes on future rate cuts.  So things will simmer down for a day or two then its back on the rocket ship.

[Deleterious]

Cable news ready with the overdramatic headlines.  

 

[gehringer_2]

2 hours ago, Deleterious said:

Cable news ready with the overdramatic headlines.  

 

the run up was funny money, the run down is funny money.

[Screwball]

More Fedspeak, as usual, and since forever. People got fleeced today given the move. Not Wall Street. As long as they keep printing money - read debt - this prick ain't going down.

[gehringer_2]

5 hours ago, Deleterious said:

He said they were going to pump the brakes on future rate cuts.  So things will simmer down for a day or two then its back on the rocket ship.

The other thing is that there are people still out there, mostly those too young to remember before before 2001, who think that rates are headed back down to 1% or less again, they're not. The end point for the fed rate in a normal world is going to be in the 2.5-4% range so whether they do it in '25 or not until '26, short terms rates aren't going all that much lower anyway. if you have a 5% mortgage, learn to be happy with it.

[Screwball]

5 hours ago, Deleterious said:

Cable news ready with the overdramatic headlines.  

 

Kinda funny. The only green on that heatmap is UNH and the healthcare stocks. I have no idea what to think of that, but kinda wild given the recent UNH stuff.

[Tigeraholic1]

9 hours ago, gehringer_2 said:

The other thing is that there are people still out there, mostly those too young to remember before before 2001, who think that rates are headed back down to 1% or less again, they're not. The end point for the fed rate in a normal world is going to be in the 2.5-4% range so whether they do it in '25 or not until '26, short terms rates aren't going all that much lower anyway. if you have a 5% mortgage, learn to be happy with it.

This is true but I am guessing that 40-60% of current mortgages have locked 2.5-4%. Add in the market has over inflated current values. No one in their right mind is going to give up those terms and overpay to take on that new mortgage. This is where the stalemate ensues. Not enough dominos falling.

[gehringer_2]

1 hour ago, Tigeraholic1 said:

This is true but I am guessing that 40-60% of current mortgages have locked 2.5-4%. Add in the market has over inflated current values. No one in their right mind is going to give up those terms and overpay to take on that new mortgage. This is where the stalemate ensues. Not enough dominos falling.

I've seen that a few lenders have started allowing mortgage assumptions, which were once very common, but I don't know if there is any significant movement in that direction. They can at least make a few bucks on fees even if they don't get to write a new note at a higher rate.

[mtutiger]

1 hour ago, Tigeraholic1 said:

This is true but I am guessing that 40-60% of current mortgages have locked 2.5-4%. Add in the market has over inflated current values. No one in their right mind is going to give up those terms and overpay to take on that new mortgage. This is where the stalemate ensues. Not enough dominos falling.

Not necessarily - people take new jobs (with higher salaries), move for work, have growing families. All of these things, even with higher mortgage interest rates, absolutely can lead to people to move.

Not saying that there aren't plenty of people who won't sit on their mortgages because of elevated interest rates, but over time that number of mortgages sitting in locked in at rock bottom rates will decline just due to attrition from these factors.

[CMRivdogs]

9 minutes ago, gehringer_2 said:

I've seen that a few lenders have started allowing mortgage assumptions, which were once very common, but I don't know if there is any significant movement in that direction. They can at least make a few bucks on fees even if they don't get to write a new note at a higher rate.

I've wondered about that. My parents bought their house on an assumed loan way back in 1968. I'm under the impression that you would have to come up with enough equity to cover what was already paid on the home. I think that would be much harder to do than the basic 20% or whatever down for a standard home.

I am happy to see where they are starting to crack down on large investors gobbling up numerous homes for resale or rental purposes. That to me at least is what is holding back first time buyers or even those of us seniors who may have sold a home to downsize, then try to get back into the market after renting for a few years. 

[Motown Bombers]

I work closely with the mortgage industry, and I can assure people are still getting mortgages. People are still buying houses. Refinances are down, obviously, but people are still giving up their low rate loan to buy a new house. The rates are at what they were during Bush. People act like this is the 80's. 

[Motown Bombers]

Lenders have always done assumptions. There wasn't any need to when the rates where low. I have seen a noticeable increase in assumptions the past year or so. 

[gehringer_2]

Just now, CMRivdogs said:

I'm under the impression that you would have to come up with enough equity to cover what was already paid on the home. I think that would be much harder to do than the basic 20% or whatever down for a standard home.

Correct - to assume you have to buy out the current owner's equity, whatever that is. But then again, a lot of people keep pulling equity out of their homes as fast as they accrue it, so there are probably still some good candidates out there. 🤷‍♀️

[gehringer_2]

4 minutes ago, Motown Bombers said:

 There wasn't any need to when the rates where low.

right - and it's really only going to be common when rates are relatively stable. When they are going up, the lender has no incentive, when they are going down, the buyer has no incentive.

The other thing that is much different from ages past is the way mortgages are securitized. You have mortgage originators who then become mortgage servicers because the note itself has been securitized and sold off. That changes the incentive structure compared to a bank that used to hold mortgages to their discharge.

Edited December 19, 2024 by gehringer_2

[Motown Bombers]

1 minute ago, gehringer_2 said:

right - and it's really only going to be common when rates are relatively stable. When they are going up, the lender has no incentive, when they are going down, the buyer has no incentive.

Assumptions are pretty simple. Your closing disclosure will state if it is assumable. If it is, it's basically like applying for a new loan. You'll need to be approved with credit and DTI, and there's still typical closing. Lenders usually charge a fee of $250. The lender has no incentive not to do it as long as the person assuming the loan is qualified. When rates were low, assumptions were still done. It was usually in cases of divorce where one spouse was awarded the house. Less common was death of the borrower and a survivor assumed the loan. 

[gehringer_2]

8 minutes ago, Motown Bombers said:

The lender has no incentive not to do it

an individual at the point of sale maybe, but when rates were going up the industry as a whole had an interest in not writing assumable mortgages, which is when they largely disappeared for a time.

[mtutiger]

1 hour ago, Motown Bombers said:

I work closely with the mortgage industry, and I can assure people are still getting mortgages. People are still buying houses. Refinances are down, obviously, but people are still giving up their low rate loan to buy a new house. The rates are at what they were during Bush. People act like this is the 80's. 

As much as some to love to talk about how many people are moving to the Sun Belt.... I assume that at least some of the folks doing the moving are trading in lower interest rates for higher ones (they aren't all paying cash lock stock and barrel lol)

Edited December 19, 2024 by mtutiger

[Hongbit]

Mortgages have skyrocketed back up over 7% this morning.   Nobody liked the fed dot plot for next year.   The housing market will continue to be under stress.  

The good news is people are starting to realize that we’re never getting back down in the 3’s and we’re probably a long way from the low 4’s.   I don’t think we need to get too far into the 5’s for the housing to pick up again.    Low 5’s would even create a small boom of activity.   

[Deleterious]

Short version on why interest rates will no doubt go back down.

Our national debt is financed via short term notes.  They constantly get rolled over and doing so at high interest rates like now is killing us.  We have spent over $1T in 2024 just servicing our debt.  The solution is stop spending money or lower interest rates so we can finance it at a lower rate.  We all know which one of those will win.

Politicians in both parties need the stock market to do well.  People equate it with the economy now, which is dumb but they do.  A more serious reason is retirement.  The middle class depends on their 401K to retire.  Low interest rates help the market, so as soon as it stutters for a prolonged period, the rates will start to be slashed.

[gehringer_2]

5 hours ago, Deleterious said:

Short version on why interest rates will no doubt go back down.

Our national debt is financed via short term notes.  They constantly get rolled over and doing so at high interest rates like now is killing us.  We have spent over $1T in 2024 just servicing our debt.  The solution is stop spending money or lower interest rates so we can finance it at a lower rate.  We all know which one of those will win.

Politicians in both parties need the stock market to do well.  People equate it with the economy now, which is dumb but they do.  A more serious reason is retirement.  The middle class depends on their 401K to retire.  Low interest rates help the market, so as soon as it stutters for a prolonged period, the rates will start to be slashed.

You can either tax away the debt or inflate away the debt. Interest rates below the economy's 'equilibrium point' will cause inflation. The question is whether inflation is a worse tax than actual taxation. And for who. Inflation hammers working class people who are not mortgage holders, but the inflation in the 70's was almost beneficial for young boomers who did have mortgages because the real value of their debt was shrinking while the asset they held was appreciating rapidly. In general, inflation is better for borrowers than for lenders, thus the government does have incentive to let inflation shrink the value of the national debt. The problem is inflation tends to be unstable - once you get much about 3-4% it tends to get self-reinforcing and then you many need a recession to stop it, and then government revenue falls, and the debt gets really bad. TINSTAAFL.

Edited December 19, 2024 by gehringer_2

[gehringer_2]

It's also possible that Trump in his more lucid moments believes that given the American First sentiment he has worked so hard to stoke, that enough tariffs will be politically acceptable enough to raise enough money to help cut the debt while he can still bask in the glow of trying to cut income taxes,  though it's unlikely to ever be presented quite that way - and recession is still the most likely outcome of a trade war.

Edited December 19, 2024 by gehringer_2

[Screwball]

I don't know what's going to happen, but I think things are pretty ****ed up. What really pisses me off is these pricks lowering interest rates. I have been piled into short term safe stuff for quite some time, and happy with my returns. I'm old, so too late for much risk. Easy safe money. But I can see how these cuts have hurt. Spit!

There are some killers out there if you want to take some risk. Corporate bonds can make you some great yield, but some risk involved. I almost pulled the trigger on some. Banks no less... I hate banks, so it's a moral victory to make money of the slimy pricks.

[Screwball]

This is funny. Speaking of banks, I just jumped over to my bank website to pay a few bills. I know it is easier to just take it out of your account, but I like to push the go button.

Anyway, most of my utility bills come early in the month, with the exception being my water bill. Not sure why. I tend to forget and get whacked with a late charge cause I forgot. That's on me, no issue. That happened again for this bill I just got. But...

When I went to pay it, I noticed my bank will not issue the check until a day after it is due. This is goofy too, because some bills are paid electronically, and some are still paper checks and the mail (like this one). It is due December 26th, and the pay date the bank picks is December 27. I can't change it unless it is later. So I will once again get whacked with a late fee. That's not my fault, and maybe what has happened before.

I know I can setup auto payments but I don't like that. That's just me. I have also been told by my house and car insurance people payments got there late due to the mail, and not me. Great...

And it gets better. I decide to create an account with my water company so I can pay them directly. I have this with other utilities because I commodity shop. So I create the account and go to pay my bill, which I could see online. It doesn't match the one I have in my hand because of timing. I owe them $2.16 online, buy my paper bill is $68.26 - containing a $1.48 late fee. Again, that's on me (maybe).

So when I get to paying the bill part, the last screen shows me the transaction and I see a $1.95 convenience fee. Apparently for doing so online. I quit. Found the support hotline, sent them a little note that I might as well pay it late. Saves me $.47.

WTF?

 

 

 

 

 

 

 

Edited December 20, 2024 by Screwball