Mr Practical Oct 04, 2007 9:45 am
As stocks climb to new highs, let’s look at what the Fed’s rate cuts have really done. 30 year mortgage rates before the cut... 6.375%. 30-year mortgage rates after the cut... 6.625%. Stocks’ reaction... priceless.
Forget about 5-year ARMs and interest-only loans. Those are priced completely differently now and are bones in the sand. A mortgage broker at a big bank tells me business is down significantly with no signs of picking up.
http://www.minyanville.com/articles/banks-Fed+rate+cut-mortgage-ARMs-speculating/index/a/14350
Showing posts with label wall street. Show all posts
Showing posts with label wall street. Show all posts
Saturday, October 6, 2007
Thursday, September 20, 2007
U.S. Fed's impact on home prices in doubt
By David Leonhardt
Published: September 19, 2007
NEW YORK: The U.S. Federal Reserve has sent the stock market soaring. So can it stop the decline in home prices, too?
Don't count on it. And that is bad news for the global economy, which heavily depends on the U.S. consumer.
From the late 1960s until 2000, the price of the typical American home and the income of the typical family moved almost in lockstep. House prices rose a bit more quickly than incomes during the occasional real estate boom, but would always settle down again. In 2000, the median home cost about $130,000, roughly three times the typical household income - almost precisely the ratio that had held since the '60s.
Then came a real estate boom unlike any before it. By last year, this ratio of prices to incomes had suddenly shot up to four and a half. For it to return to its old level, home prices would have to fall by an almost unthinkable one-third, and probably more in California, Florida and the Northeast.
http://www.iht.com/articles/2007/09/19/business/leonhardt.php
Published: September 19, 2007
NEW YORK: The U.S. Federal Reserve has sent the stock market soaring. So can it stop the decline in home prices, too?
Don't count on it. And that is bad news for the global economy, which heavily depends on the U.S. consumer.
From the late 1960s until 2000, the price of the typical American home and the income of the typical family moved almost in lockstep. House prices rose a bit more quickly than incomes during the occasional real estate boom, but would always settle down again. In 2000, the median home cost about $130,000, roughly three times the typical household income - almost precisely the ratio that had held since the '60s.
Then came a real estate boom unlike any before it. By last year, this ratio of prices to incomes had suddenly shot up to four and a half. For it to return to its old level, home prices would have to fall by an almost unthinkable one-third, and probably more in California, Florida and the Northeast.
http://www.iht.com/articles/2007/09/19/business/leonhardt.php
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