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June 11, 2009
Interest Rate Jump
These new mortgage interest rates are killing me :). In just two weeks they've shot up so fast! I'm going to be in contract on a one bedroom co-op by Friday (knock on wood) and have started shopping for a loan - was shocked that rates that were quoted to me a few weeks ago (4.875) are now much higher (5.875 w/points).
Has anyone out there applied for a loan very recently (in the past week or two) and found a lender offering a good rate?
So far Astoria Federal and Sovereign Bank have quoted me the best rates (I'm also working with a mortgage broker).
Also, I know no one has a crystal ball but is it just up up up from here? Some loan officers are telling me they're hoping they'll go down while others are saying no way they'll go down.
Thanks!
Comments
We were quoted 4.25 about 3.5 weeks ago and locked in at 4.85 two weeks ago.
The rates are really flying up, & I heard tonight on NPR that the number of mortgages is dropping accordingly.
Posted by: lgruber at June 10, 2009 9:04 PM
What! Were interest rates not suppose to be 4.5 for the next 40 years? I wonder what will happen when we hit double didget inflation? Well home prices are going to have to come down iether by price reduction or by paying higher intest rates. This policy of extra low interst rates screwed thwe whole country really good. Thank you Mr. Greenspan and Mr. Bernanke!
Posted by: hannible at June 11, 2009 2:28 AM
9.5% unemployment and you're concerned about inflation? Why does a short-term spike in interest rates equate to that?
Posted by: Johnny at June 11, 2009 8:49 AM
They might go down a bit, but that'll probably just be a temporary fluctuation. Overall they're bound to go up...
I bought a condo in early 2001. I got a 6.9% rate or something like that. A co-worker was pissed because he bought a bit before me at was paying around 8%.
4% is rock bottom. 5.9% is still decent. Just wait until they hit 8% again. You'll long for the days of 5.9%...
Posted by: christopher at June 11, 2009 9:45 AM
The current rise in treasuries has nothing to do with expectations for inflation. They are rising because of 1. Sales of treasuries by the investing public that is seeking higher risk/return in the equity markets, 2. Nervousness about the auctions which btw, went very well yesterday and 3. Nervousness about Foreign Central Banks cutting back on Treasury holdings.
On the latter, Gavekal sums it up quite concisely:
"China, Russia and Brazil have said they would be happy to put up a combined $110bn in a planned IMF bond issuance. However while the IMF is seeking $750bn in new funding to help deal with the crisis, it is likely to issue from $250bn to $500bn in bonds. In comparison, the US has issued
US$1.5trn in Treasuries in the past year alone. China, Russia and Brazil together have a combined $2.5 trillion in forex reserves—where is this money supposed to go?”
Posted by: daveinbedstuy at June 11, 2009 9:51 AM
The best rate for 30-year purchase I could find as of today is at HSBC: 5.875% no point. Check it out:
http://www.us.hsbc.com/1/2/3/personal/home-loans/mortgage/mortgage-rates
No one can really tell how the rates are going to change.
I would just try to focus on getting the best purchase price for your co-op.
Posted by: lostintranslation at June 11, 2009 9:52 AM
i just locked 5.25 30-yr fixed last week... i think we wont be going back lower any time soon.. lock now as inflation is gonna hit (even if its just implied inflation to start)
Posted by: hazenyc at June 11, 2009 9:58 AM
"The current rise in treasuries has nothing to do with expectations for inflation. They are rising because of 1. Sales of treasuries by the investing public that is seeking higher risk/return in the equity markets, 2. Nervousness about the auctions which btw, went very well yesterday and 3. Nervousness about Foreign Central Banks cutting back on Treasury holdings."
Dave come on when are going to stop! It's over guys the credit sprout is slammed shut!
The What (It's over)
Someday this war is gonna end...
Posted by: Return of The What at June 11, 2009 10:00 AM
What, why continue to be such an asshole???? If you've got something intelligent to add then add it. Otherwise, STFU.
Posted by: daveinbedstuy at June 11, 2009 10:01 AM
Dibs is right -- the consensus is that the rate rise is due more to a reversal of the "flight to safety" that happened when people pulled out of the stock market, not so much because of inflation expectations.
This is about an extra 1000 a month on a 1MM loan -- gotta be painful. Does anyone have stories of people who have to abandon their home purchase plans because of these rates?
Posted by: joe_the_bummer at June 11, 2009 10:10 AM
treasuries going up for any reason = weaker dollar which is the same as implied inflation. This usually precedes true inflation across the board but already we're seeing a change in sentiment, oil & commodities & food already rising
Posted by: hazenyc at June 11, 2009 10:12 AM
(when is say treasuries up im talking the rates going up)
Posted by: hazenyc at June 11, 2009 10:13 AM
I am currently refinancing not buying. But I think 5.875% with no point is not that bad. If I had the downpayment I would buy a 1BR knowing that the asking prices are really low nowadays.
Posted by: lostintranslation at June 11, 2009 10:15 AM
"What, why continue to be such an asshole???? If you've got something intelligent to add then add it. Otherwise, STFU."
This sounds like panic. I hope it was "intelligent" for you Dave. The issue is Quantitative easing when the Fed is printing money and Bond holder are worried about Inflation Expectations.
Quantitative easing
http://en.wikipedia.org/wiki/Quantitative_easing
The problem is you can't tell money where to got and too much money chasing Asset Classes i.e. Real Estate, Commodities or Toxic financial instruments is a big problem. I told everyone the The Bond Market control rates not The Fed! It's over guys just face the facts..
The What
Someday this war is gonna end...
Posted by: Return of The What at June 11, 2009 10:16 AM
Mortgage rates are still very, very low by historical standards. Expecting less than 5% money for any meaningful period of time is unrealistic. Wait until rates hit 7% or higher, unemployment is where it is now or higher and the inevitable increase in Brooklyn inventory materializes. Prices kept up surprisingly well in Brooklyn this spring but the overall bias is still strongly negative.
Posted by: lechacal at June 11, 2009 10:23 AM
this isn't about home prices, you vultures.
Posted by: joe_the_bummer at June 11, 2009 10:35 AM
did someone ask for me? I heard my name ("vultures") called.
Posted by: more4less at June 11, 2009 10:39 AM
the way dibs put it is the same way bernanke put it. it's as right as you can be without 20/20 hindsight.
long term, there is definitely a potential problem with the US having to inflate its way out of debt, and since the US guarantees most mortgage debt, the mortgage rates would follow.
but we're not there yet. this was flight to quality. US rates are down since the crisis started, for good reason. we're still the global daddy.
there is an obvious PR campaign about long-term budget balancing, precisely to fight inflation expectations, so no one's wrong to be concerned. but *deflation* is still more of an issue, because we've got a serious shortage of jobs and income across the globe.
market-wise right now, the fed is feeling too much headwind when they are out buying back treasuries to keep rates down.
Clearly you can't be buying something while selling (issuing) multiples of the same thing, and expect it to work for long.
So it's not able to overcome the huge public forces that move long term rates (as "What" so eloquently pointed out). There is a limit to the effectiveness of this "quantitative easing" when you are 10Tr in debt.
Posted by: joe_the_bummer at June 11, 2009 10:44 AM
When I bought I was paying 18% - was thrilled to get it down to 8.25 about 5 years later. Pay attention to both the rates I was paying & the time frame of the reduction.
Posted by: Arkady at June 11, 2009 10:48 AM
Good thing we have Paul Voelker back to remind us of those good times.
Posted by: joe_the_bummer at June 11, 2009 10:55 AM
j bummer, vultures like 18% interest rate
Posted by: more4less at June 11, 2009 10:59 AM
m4l can you imagine...
I plugged it into corco's mortgage calculator, for a 1MM mortgage. How does 15,070.85 a month sound?
but don't worry, that's tax deductable.
Posted by: joe_the_bummer at June 11, 2009 11:11 AM
j bummer, that's why it's beautiful. It forces down prices so that the monthly outflow is back to something someone can afford or willing pay.
Posted by: more4less at June 11, 2009 11:16 AM
true that. but this is not about prices, you gutter dwelling pirhanna, who greedily capitalizes on the misfortune of others. :|
makes me wonder out loud again: why are adjustable rate mortgages legal?
Posted by: joe_the_bummer at June 11, 2009 11:27 AM
j bummer, vultures don't cause the pain & destruction. we simply clean up the mess someone else left behind.
when rates move up above 7% (regardless of the drivers for the increase), you'll see it's impact on prices
Posted by: more4less at June 11, 2009 11:35 AM
right? anyone? I mean, no one's even discussing this in congress or anywhere else. A prime ARM can blow away ANYONE, if rates just go half way back to where they were in the 80s.
You can't even legally leverage your stock portfolio more than 2:1, but you can bet your life savings on interest rates.
Posted by: joe_the_bummer at June 11, 2009 11:45 AM
"When I bought I was paying 18% - was thrilled to get it down to 8.25 about 5 years later. Pay attention to both the rates I was paying & the time frame of the reduction.
Posted by: Arkady at June 11, 2009 10:48 AM"
Arkady, you'd make a good investor - buying when others are throwing in the towel.
At 18%, the prices have to be depressed in order for anyone that requires financing to be able to afford them. As the rates come down, the affordability issue eases off so prices can rise as well as the rate you're paying to be brought down also.
Sub-5% interest rates are good for people looking to refi. They are not so good for people buying.
Posted by: the chicken at June 11, 2009 11:53 AM
I am consistently dumbfounded by the What's lack of sophistication. What, did your folks tell you to be quite when grown ups are taking?!? Mind you manners, What, mind your manners!
Cutting and pasting from Wikipedia does not an economist make.
Posted by: bedstuyhoya at June 11, 2009 12:00 PM
The crazy thing about this run up in rates is that the FHA 5 yr ARM is still around 4.5-4.75%
Home buyers that are in contract may be forced to take an ARM if they do not qualify any longer or risk losing their escrow deposit. You will start hearing stories about this in the next month or so.
A little positive news is that the Treasuries met a lot of resistance as they approached 4% and have since come down of their highs and MBS has followed suit, I saw a mid day price change for the better today, the first in I don't know how long it seems.
The Media and politicians were filling people's heads that rates were going to 4% and many held off, bank's turn times have been horrific and many people are upset that rates have moved this quickly.
It's hard to speculate what is going to happen in the future. Inflation? Definitely yes in the future, but not as soon as some are predicting. A lot of market pros are now starting to think we will have a pull back as the equities rally may be a little too much too soon. We may in fact see a "W" recovery instead of the "V" recovery that we are seeing right now.
Don't take my word on it as anything could happen right now. Fundamentals are totally out of the window as sentiment and emotion are ruling the market.
Posted by: Adam Dahill at June 11, 2009 12:03 PM
Adam do you see people ready to bail on contracts if the rate goes up? do prospective buyers lose their deposit if the rates spike between contract and closing and they are unable to afford the higher payment?
Posted by: joe_the_bummer at June 11, 2009 12:09 PM
DIBS since when did the IMF start issuing bonds? Is this a pretext to a "global" currency? What do they do what the money?
Posted by: dosteov at June 11, 2009 12:28 PM
"Home buyers that are in contract may be forced to take an ARM if they do not qualify any longer or risk losing their escrow deposit. You will start hearing stories about this in the next month or so."
Adam Dahill you are a piece of shit! Now you're pimping Arms now?????!!!!! What happen your "Rate Locks" implode and you switched your clients into Toxic Arm shit????!!
Looks like the days of Bottom Feeding are over!
"The crazy thing about this run up in rates is that the FHA 5 yr ARM is still around 4.5-4.75%"
The new FHA coupons are at 5%!!!!!!!!!!! Don't believe me just look for a rate sheet just google it!!
"The Media and politicians were filling people's heads that rates were going to 4% and many held off, bank's turn times have been horrific and many people are upset that rates have moved this quickly."
If you read my posts you understand how it works! THE BOND MARKET SETS RATES! Not the Fed, The the Government and not by Fucktards!!
Nice try Adam! Guys if you listen to people with an agenda bad things will happen you you..
The What
Someday this war is gonna end...
Posted by: Return of The What at June 11, 2009 12:29 PM
Chicken - I'm just ignorant.
Posted by: Arkady at June 11, 2009 12:33 PM
brooklyncurious you might try HSBC if you didnt already, they're pretty competitive.
joe I think it depends on the contract--I'm in the process of closing on a place as well, I think our contract gives us an out if we can't secure financing but I dont think we could get out of it if we're approved and just dont like the rate. Here's hoping (praying) we close before our rate lock expires...
Posted by: woodys at June 11, 2009 12:33 PM
Adam- that is because many ARMs are based on LIBOR which is still (artifically) very low.
Posted by: hazenyc at June 11, 2009 12:42 PM
good luck woody. don't listen to these stiffs.
Posted by: joe_the_bummer at June 11, 2009 12:46 PM
What, No you classless loser, I'm not "pimping ARMS" Where in my post do you see that? My post about ARMS is in reference to joe the bummer's post. I'm also just passing along what I'm hearing from realtors and other mortgage professionals that I converse with on other sites. You will see news of this in the upcoming months. People in contract have had their future payments jump and are now at a risk of losing their escrow deposit if they don't close. Not all but some most likely. Just Google it as you say.
ARMS got a lot of people in trouble, not as much as the media will have you to believe but yes SUB-PRIME ARMS with high margins were extremely bad. Those with conforming LIBOR ARMS had them adjust at very low rates. Those margins were about 2.25-2.5%, SUBPRIME 2/28's had margins as high as 8% which killed people when they adjusted. It's the NEG-AM Option ARMS which I feel were way much worse. Do you know at the peak of the craziness a company called ABC mortgage; a large national mortgage bank was doing 100% Neg-AM loans. You were upside down after your first payment. CRAZY.
What- Why do you have such a vendetta with me? You are a mortgage broker, one with a sick twisted delusional alter ego, but still a mortgage broker. Glass Houses, Glass Houses.
I don't need you to tell me how rates work. I know how rates work. Inflation fears and investors demanding higher returns for US treasuries have pushed rates higher.
What- you need to get some better lenders if you are only at 5% on a FHA 5yr arm. TB & W has 4.5% on a 5/1 ARM paying 100.996. I don't sell ARMS or even deal with brokering loans but even I could find that rate within 10 minutes.
Class is over- you need to study some more.
Posted by: Adam Dahill at June 11, 2009 12:56 PM
Rates just moved a little lower woody, hang in there.
One think to watch out with HSBC is that if you plan to refinance anytime in the future they will no assign to another bank aka CEMA, you would be forced to deal with them and only them if you don't want to pay the mortgage tax again. This doesn't apply to you since you are buying a coop but another else reading. I just had a interview with a reporter at bloomberg news about the very same topic.
Posted by: Adam Dahill at June 11, 2009 12:59 PM
Maybe its just me, but below 6% is still very low, and if the difference between a 4.85% loan and 5.85% loan means you can't afford the house, you should not be buying it in the first place. Astonishing how short memories are . . .
Posted by: PHer at June 11, 2009 1:00 PM
I have some contacts who have been able to find aggressive rates for clients. Not sure of the rates, but if you email me I can forward you their contact info: esegal(at)primerica.com
Posted by: SaveNowForCollege at June 11, 2009 1:07 PM
"People in contract have had their future payments jump and are now at a risk of losing their escrow deposit if they don't close. Not all but some most likely. Just Google it as you say."
Hey fuck 'em!
"I'm also just passing along what I'm hearing from realtors and other mortgage professionals that I converse with on other sites. You will see news of this in the upcoming months. People in contract have had their future payments jump and are now at a risk of losing their escrow deposit if they don't close. Not all but some most likely. Just Google it as you say."
Please don't lewt my deal die! Here Homesucker.. er Homebuyer have a nice Arm product where the recast will kill you!
"ARMS got a lot of people in trouble, not as much as the media will have you to believe but yes SUB-PRIME ARMS with high margins were extremely bad. Those with conforming LIBOR ARMS had them adjust at very low rates. Those margins were about 2.25-2.5%, SUBPRIME 2/28's had margins as high as 8% which killed people when they adjusted."
Guess what Adam?? The Mortgage Guys are back to pimping Arm in fact our Government is behind it! Gotta reinflate at any cost (3.00 gas and high food prices).
What- Why do you have such a vendetta with me? You are a mortgage broker, one with a sick twisted delusional alter ego, but still a mortgage broker. Glass Houses, Glass Houses.
I'm a Real Estate Broker not a Mortgage Broker Adam! I witnessed plenty of fraud in your industry! The funny this is you want to come off as a "Good Guy" but you are a bottom feeding fucking Leech!
"I don't need you to tell me how rates work. I know how rates work. Inflation fears and investors demanding higher returns for US treasuries have pushed rates higher."
I can put on a clinic about the lies in your posts but I will let the implosion of the Mutant Asset Bubble take care of that!
Guys listen to Adam at your own peril..
The What
Someday this war is gonna end..
Posted by: Return of The What at June 11, 2009 1:12 PM
ramblings of a mad man.
Posted by: Adam Dahill at June 11, 2009 1:18 PM
"if the difference between a 4.85% loan and 5.85% loan means you can't afford the house, you should not be buying it in the first place"
Amen and halleluiah brother.
Posted by: lechacal at June 11, 2009 1:36 PM
"I'm a Real Estate Broker not a Mortgage Broker Adam! I witnessed plenty of fraud in your industry! "
ROTFLMMFAO...Real estate brokers lie through their teeth. Trust me, real estate brokers rank down their with used car salesmen.
Stop trying to put lipstick on!!!!!
Posted by: daveinbedstuy at June 11, 2009 1:44 PM
DIBS, let's be fair. used car salesmen tries to sucker you into buying something for $20k or less. RE brokers are pushing 500k or more. Used car salesmen not as bad - ie they aint trying to ruin your whole life.
Posted by: more4less at June 11, 2009 1:49 PM
PHer and lechacal - my issue of course isn't that the higher interest rates mean i won't be able to afford the apartment but i'd definitely rather have that extra $115 in my pocket and not the bank's! and i think anyone would admit the rates have jumped quickly in a relatively short period of time.
Posted by: brooklyncurious at June 11, 2009 2:26 PM
Go back to 1981-1982 when inflation was double digits. 30 year rates were 17%-18% with a couple of points. Interest rates today are still extremely low by historical standards. You always want to get the best rate, but in the relative scheme of things, 5%-6% mortgage money is very attractive.
I see a lot of posts about the negatives of inflation for homeowners. Inflation is bad for renters too. They are going to face inflation fuled rent increases. At 5% inflation, a $3,000 a month rent increases to nearly $5,000 over 10 years. At 10% inflation, a $3,000 a month rent increases to nearly $5,000.
If you're an owner with a fixed rate mortgage, your cost for housing will remain relatively constant.
Posted by: Boerum Hill at June 11, 2009 3:35 PM
""Real estate brokers lie through their teeth. Trust me, real estate brokers rank down their with used car salesmen.""
-- I'd be equally as willing for a dentist to be drilling . . . --
Posted by: SenatorStreet at June 11, 2009 3:46 PM
"You always want to get the best rate
Posted by: Boerum Hill at June 11, 2009 3:35 PM"
No you don't!!!!!!
For a given loan amount you DO want the lowest rate but actually what you want is the lowest repayments in absolute terms.
Assuming it is on the same house, would you rather have a 5% rate on a $1m mortgage or a 10% rate on a $500k mortgage? The interest on both is the same but the repayments on the latter will be lower.
Higher rates will lead to lower prices (not always but in this environment I believe they will as affordability is the overriding issue).
"If you're an owner with a fixed rate mortgage, your cost for housing will remain relatively constant.
Posted by: Boerum Hill at June 11, 2009 3:35 PM"
If you secure a low fixed rate mortgage you do lock in constant repayments so there is no downside but there is also no upside - there's no point in ever refinancing since rates won't go below what you got.
If you have a high fixed rate mortgage, you have no downside (since you've locked it in) but plenty of upside when rates go down in the future and you can refinance at a better one.
Posted by: the chicken at June 11, 2009 4:04 PM
Exactly, chicken.
If you buy when rates are high and prices are low, you can always refinance into a lower rate when the cycle turns. Then you end up with a low rate and a low balance, and as an added bonus you get the benefit of price appreciation when rates come down.
If you buy when rates are low and prices are high, you get no refinancing benefit when rates go up, you are stuck with a high-balance loan and as an added kicker you take lots of risk of price declines as rates go up.
People are funny how they focus on all the wrong things.
I am hoping for much higher rates when I buy.
Posted by: lechacal at June 11, 2009 4:20 PM
bring forth the good old 18% rates please cause I would like to buy a brownstone for the oft quoted 50% off
Posted by: more4less at June 11, 2009 4:23 PM
Chicken + Lechacal,
"People are funny about how hey focus on the wrong things". Just like you guys did.
My post offered no opinion about whether real estate prices will go up or down or whether or not this is a good time to buy. I don't know which way the market is going to go, and doubt that either of you does too. My advice was addressed to the original poster who has already made a decision to buy (they intend to sign a contract this Friday)and who was worried about the recent rise in mortgage rates. My advice stands. If you're going to buy, I think you shouldn't be put off by the recent increase in rates. In a historical context, mortgage rates they are still attractive.
I house hunted for a couple of years in before I bought my house in 2003. When I started house hunting, 30 year mortgage rates were between 7%-8%. I never thought rates would go much below those levels. I consider myself lucky that my mortgage rate today is 5.375%.
Posted by: Boerum Hill at June 11, 2009 4:56 PM
Interest rate spikes are irrelevant to patient buyers who don't fall for the hype and get trapped in contracts for set prices. Eventually, the market will adjust prices accordingly. It's the market fundamentals that are relevant to the buyer. And they are already weighing very heavily on prices.
It's a broker/seller/developer/banker/investor/bagholder community hook to scare would-be buyers into striking while interest rates are low but prices high. Anything to get you to help them offload.
Interest rate spikes are, however, absolutely relevant to the seller. In most cases, and in the long term, they are ONLY relevant to the seller.
***Bid half off peak comps***
Posted by: Brownstones Half Off at June 11, 2009 5:05 PM
"My post offered no opinion about whether real estate prices will go up or down or whether or not this is a good time to buy."
Oh yes it did! By implication. Your last two paragraphs @ 3:35 were sneakily biased toward buying NOW.
Then you say...
"If you're going to buy, I think you shouldn't be put off by the recent increase in rates."
...which sounds to me like market-timing.
"In a historical context, mortgage rates they are still attractive."
The same can be said about prices being historically unattractive.
Yes, you're fortunate to have bought low enough in '03 and secured a low rate but you would have been even luckier had you taken profits at the peak, rented (or found a hell of a deal) and then bought back in at the bottom. You'll never see a boom/bust like this again.
***Bid half off peak comps***
Posted by: Brownstones Half Off at June 11, 2009 5:18 PM
"People are funny about how hey focus on the wrong things. Just like you guys did."
erm...no. I think I'm focused on exactly the right thing - what your repayments will be. It's the bottom line.
"My post offered no opinion about whether real estate prices will go up or down"
Your post pretty clearly implied that your opinion is that prices will not go down significantly from here. Is my inference wrong? Nothing wrong with having an opinion - I've got one myself.
"I don't know which way the market is going to go, and doubt that either of you does too."
See above. My posted views have been very consistent. You can't know with certainty until after the fact but I certainly have a strong opinion. I might be wrong from here but I've been right so far.
"My advice was addressed to the original poster who has already made a decision to buy (they intend to sign a contract this Friday)and who was worried about the recent rise in mortgage rates. My advice stands. If you're going to buy, I think you shouldn't be put off by the recent increase in rates. In a historical context, mortgage rates they are still attractive."
You may be reading my words but they aren't sinking in. I explicitly said that for a given mortgage, the lower rate is better. However, in the context of the preferential situation, I think that higher is better. If you are signing a contract this Friday then the deal is not done - why not go back to the seller and say that the mortgage rates have gone up since you agreed on a price and that you need to adjust your offer price in light of that? It's no different from finding out that remedial work is required after conducting a survey and negotiating the price accordingly. If they say no then it's up to you how much you really want that specific property. If you can't bear to walk away then "BE A MAN" and pay up. I can say that in this environment, the seller needs you more than you need them.
"I house hunted for a couple of years in before I bought my house in 2003. When I started house hunting, 30 year mortgage rates were between 7%-8%. I never thought rates would go much below those levels. I consider myself lucky that my mortgage rate today is 5.375%."
You have proved my point exactly! You had zero downside because you already had a 7-8% rate but you were able to get upside by moving to 5.375%. If your starting point was 5.375% then you've got no downside but very limited scope for upside as well - do you think we will every see 4% fixed 30 year mortgage rates EVER??
Posted by: the chicken at June 11, 2009 5:44 PM
Brownstones 1/2 Off,
There wasn't anything "sneakily biased" about the last two paragraphs of my first post which said that (a) inflation is bad and (b) a fixed rate mortgage gives you fixed cost of housing over a long period of time. I think those comments are safely in the fact based category.
I didn't try to time the market when I bought and wouldn't try to do it know. It's a skill very few people have, and getting in and out of NYC real estate ownership is shockingly expensive. The closing costs associated with buying my NYC house were more than the total purchase price for a vacation house I bought later.
For right or wrong, I don't look at my house foremost as an investment, though I hope not to lose money on it. I've lived in my house for 6 years and hope to live in it for 10-20 more. While I was a happy renter for 15 years, including 10 years in one place, I wanted to own a house I could raise a family in. I looked until I found a place that I both liked and could afford. I'm glad that mortgage rates went down, but would have been fine living with my original rate.
As for Chicken, I fully understand what you're saying, which is essentially that it's better to buy when prices are low, even if rates are high. There's a chance you can change your mortgage rate, but no chance to change your purchase price. The working assumption is that you know when prices low. Maybe you do. Maybe you don't. It's a gamble either way. That said, your advice to the OP has merit. Since no contract has been signed, it is possible to re-negotiate. It could saver the buyer money. It could also kill the deal. The OP should consider doing it.
Posted by: Boerum Hill at June 11, 2009 7:30 PM
Probably the original rate you were quoted wasn't what you would get anyway. And in the scheme of things, rates are rock bottom. You will be crowing to your friends about your rate in a few years when interest rates hit 10%. Lock in what you can get now and forget about it. Don't worry about what you can't control.
Posted by: BrooklynTurtle at June 12, 2009 10:19 AM
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