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Calc. Risk: Gov. Housing Support Update

 
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melonrightcoast



Joined: 22 Feb 2009
Posts: 236
Location: metrowest

PostPosted: Sat Jan 02, 2010 9:56 pm GMT    Post subject: Calc. Risk: Gov. Housing Support Update Reply with quote

I don't recall seeing this posted here (and didn't see it on the list), sorry if it is a repeat. This is a good entry at Calculated Risk regarding the various programs for housing and when they will expire (if applicable). I like the quote from a shill for the Realtors:

"Lawmakers "made us promise practically in blood that we would not come back" for another extension, Linda Goold, the Realtor group's director of tax policy, told her members."

Right ... this list is unbelievable. All that money wasted to keep banks solvent ... that is sickening. I almost feel guilty for cashing in on the gov. handouts.

So, a question to more of you with mortgage/banking knowledge: what happens in five years when rates for mortgages are at 8% and all these homeowners have mortgages with rates of 5%? Wouldn't that be bad for the banks bottom lines? And if that is the case, then is the gov. going to keep on keeping rates artificially low ... forever?

http://www.calculatedriskblog.com/2009/12/government-housing-support-update.html
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Sun Jan 03, 2010 5:34 am GMT    Post subject: Reply with quote

Not bad for banks - bad for you. Even if bad for banks, they are more than well capitalized now. There's a bunch of not too big to fail players playing hot potato with the mortgages still as well.

Anyway, you'll stay in the house because you can afford to and because the person trying to buy your home won't be able to pay nearly as much. Homeowners will learn the "don't buy if you plan on living there less than 5 - 7 years" rule the hard way, since people are still accustomed to the old rules I think.

I think the plan is to gradually allow the rate to rise so that either the loss is spread among multiple homeowners or so that the existing homeowners see it slow enough to adjust. If that's there plan, then the first 3 months of 2010 aren't really long enough. Not clear to me that they have much of a plan and they certainly can't keep this up forever. Remember, our gracious lenders have guns and other forms of persuasion at hand too. Treasuries have already had a historical rise in interest rates this year. At the very least, I expect that the world economy would eventually continue without us, given that the emerging markets are still growing and China will surpass us within 10 years.

I assume you saw that Boston.com article btw. Seems that the conservative (Freddie?) economist puts interest rates at 6% by end of 2010 and the more aggresive (Morgan Stanely?) puts it around 9%. Economists tend to be optimistic as well. Surveys aren't showing much income growth planned next year and the resets will start coming again. Should be fun.

Speaking of 2010, should we start a thread with predictions? Smile
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