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PSA - 30 Year Fixed headed to 5.5%?


Diamond Member
Nov 16, 2004

HSBC Asia economist on CNBC Asia yesterday said that a large part of the jump in unemployment rate was construction related. I think he also was projecting possible bottom in housing market in middle to end of next year (doesn't imply that things will V bottom; just that they will stop going down, and old NY Times Rent vs Buy article said it took almost 10 years for prices to get back to nominal, i. e. not adjusted for inflation, prices after last housing boom in 1980s).

Readily available, affordable financing and some sense of job security are obvious key components of getting the housing market moving again. Realistic sellers are needed, too, but that seems to more seller and property specific.

I read that spread between 30 year fixed mortgage rate and 10 year Treasury Note yield has historically been 1.5 - 1.75%, while it has expanded dramatically during the current global credit crunch. Sounds like the Fannie Freddie move should hopefully reduce that risk premium, even if 10 year Treasury rates go up, so that financing ends up be more affordable and actually available to more potential home owners and sellers.

Historic Affordability Data (just change month and date to get other month's report):
http://realestateconsulting.co...tter=Local/local200706 (6/07)
http://realestateconsulting.co...tter=Local/local200803 (3/08)
http://realestateconsulting.co...tter=Local/local200806 (6/08)

Excellent How to Shop for a Mortgage book: http://www.amazon.com/Mortgage...&qid=1220905914&sr=8-1