As Mortgage Rates Rise, More Deals Sink
The suffocating embrace of the subprime crisis is definitely starting to take the wind out of the city’s residential deals. Mortgage brokers say they’re seeing a pronounced uptick in the number of buyers who are backing out of deals because they can’t get mortgages at competitive interest rates. Hardest hit are borrowers who don’t have…
The suffocating embrace of the subprime crisis is definitely starting to take the wind out of the city’s residential deals. Mortgage brokers say they’re seeing a pronounced uptick in the number of buyers who are backing out of deals because they can’t get mortgages at competitive interest rates. Hardest hit are borrowers who don’t have excellent credit histories, or who expected to take out large mortgages and then pay them down with bonuses. A number of brokers say they’re seeing plenty of prospective buyers who didn’t lock in rates and who can’t close on the units because they can’t afford higher-than-expected monthly payments. And these are borrowers who aren’t necessarily on financially shaky ground—a sobering article in today’s Times documents some of the effects of too-lenient lending practices geared towards lower-income earners. Large swaths of working-class enclaves in the boroughs, like parts of central Brooklyn, have turned into new-development ghost towns because of predatory lending practices and concomitant rising foreclosure rates. So it’s becoming clear that the mortgage industry crisis is now affecting the city’s haves and have-nots. Anyone had a deal scuttled recently?
Frustrated New Yorkers Grapple With Loan Rates [NY Times]
Risky Loans Help Build Ghost Town of New Homes [NY Times]
Photo by D.B. Blas
Since the cost of financing has risen 5-10% over the last few months, shouldn’t prices fall by a corresponding amount?
Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men. –
Woodrow Wilson
Good week sheeple.
This issue is important. No money no sales. It’s funny if people would lower their price, houses would sell again.
But human greed will kill this Real Estate Mutant Bubble.
BTW on Friday, I got into a war over rate sheets. Let me clear that up. The 9.5% quote was for under 640 fico , 20% down programs. Not someone who has a fico score of 720 and over. These people will always get great rates. The 680 and under crowd will get hammered. The 680 and under crowd is 80% of people looking for homes now, 80%!!!!!!!!!!!! So if someone is buying you house with good credit, you better take that deal.
Last thing, people say that “I closed with Bah Bah Bah program”. That program is GONE GONE GONE. From July until now mortgage programs got vaporized. roker are have problems finding homes for deals.
I went into contract in June and closed in August. 700+ credit, 10% down, 30 yr fixed loan. I didn’t lock my rate back in June. My quotes in June were 6.25%; by August they were 7.5%. I ended up somewhere in between by splitting the loans up, but still, it increased the costs of the deal to me by several hundred a month.
9:41 – Funny, Wamu was a close second in mortgage. They also had really decent programs.
I think the local banks have alot to offer in this mortgage market. They tend to be more willing to extend 80/10/10 deals because they are not packaging these things off to investors so quickly like the “Big Boys”. They also typically keep the Home Equity in-house which means better approvals and rates.
I just closed on a deal that involved 95% financing through Washington Mutual for 1st time buyers without a huge salary in Bed-Stuy. It was a jumbo loan too. Bad news sells more papers for the NY Times. But it’s not really representative of what we are seeing in the marketplace at this point for most of our buyers. If the employment numbers go way down in NYC I think there will be trouble. But so far that seems relatively stable.
I put 10% Down – Fico is over 720 Though.
If we didnt get this deal through commerce, we would have ended up paying like 4 or 5 hundred a month more…
Might have thought about backing out at that point.
We are very nosey but, how much did you put down?
Both Fixed – The 417K is 30 years, the 123K is 29 years
Were these fixed or adjustable?