If You Think Mortgage Rates are Low Now, Wait Until You Read This

Posted on | December 26, 2008 | 25 Comments

Mortgage rates are currently at four year lows causing mortgage applications to be up 48 percent. It seems like the perfect time to refinance your home or jump in and get that first mortgage, right? Well, if you think mortgage rates are low now, just wait until the Christmas retail sales come in and the commercial real estate market crashes

It is quite obvious that Americans are spending frugally as we are making much less money, if any at all. The unemployment rate continues to rise and investor confidence gets shaken each and every week. If Americans are afraid to invest in this economy, they are highly unlikely to spend as a consumer. This is very bad news for the Capitalist country in which we live. If retail establishments start going under, the housing market will only get worse.

If the housing market gets worse, the only thing that Ben Bernanke and the Federal Reserve can do is continue to drop rates to a point where Americans will be willing to apply for a mortgage. The question is, how will anyone get approved for a mortgage when the unemployment rate is over 10% and many retail chains are planning on cutting back the job force. It is hard to fathom this country having to deal with retail sales down double digits month after month, but this is very likely in 2009.

With all that being said, mortgage rates could go to as low as 3.5% just to appeal to the American consumer. Ultimately a bottom will be formed, only the strong retailers will survive, and the economy will flush itself out. Just do not hope for this to be anytime soon as Circuit City and Linens-N-Things have filed for bankruptcy, Starbucks is closing stores and Walgreens is stunting growth. Whats next?

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25 Responses to “If You Think Mortgage Rates are Low Now, Wait Until You Read This”

If You Think Mortgage Rates are Low Now, Wait Until You Read This | forexrecommendation.com
December 26th, 2008 @ 6:07 pm

[...] Go to see the original [...]
If You Think Mortgage Rates are Low Now, Wait Until You Read This
December 26th, 2008 @ 8:08 pm

[...] Random Feed wrote an interesting post today onHere’s a quick excerptMortgage rates are currently at four year lows causing mortgage applications to be up 48 percent. It seems like the perfect time to refinance your home or jump in and get that first mortgage, right? Well, if you think mortgage rates are low now, just wait until the Christmas retail sales come in and the commercial real estate market crashes It is quite obvious that Americans are spending frugally as we are making much less money, if any at all. The unemployment rate continues to rise and in [...]
Wayde Mckelvy
December 26th, 2008 @ 10:36 pm

And don’t forget…Bernanke and the Federal Reserve also like to print more currency when they feel like “helping out,” which essentially erodes the already declining dollar. There is no telling what the geniuses in Washington might come up with next. Put on your seat belt, it’s going to be a bumpy ride.
Prof. Samuel D. Bornstein
December 27th, 2008 @ 7:28 am

Unfortunately, the worst is yet to come, unless Congress and the Obama Administration take PROACTIVE steps to address a major factor that impacts the Housing Market, Foreclosures, and Job Loss. To make matters worse, any adjustment to the interest rate will have minimal effect due to the type of mortgages that millions of small business owners currently have…ALT-A and Pay Option ARMs !

On December 14, 2008, CBS’s 60 Minutes had a segment on the 2nd Wave of Foreclosures. They indicated that experts were expecting another wave of mortgage defaults on ALT-A and Option ARMs mortgages which will dwarf the Subprime Mortgage Crisis.

Many fail to realize that there are millions of self-employed smaller businesses, who employ from 1-10 employees, that are holding the mortgages that are going to reset in 2009 through 2012. These borrowers are Prime and Near-Prime borrowers who hold ALT-A, Option ARMs, Interest-Only mortgages. There are $1 Trillion ALT-As, and $500-600 Billion Option ARMs.

So, here we have a major problem… Not only will these small business owners lose their homes, but there will be the resulting JOB LOSSES on their business failure. Note, although President-Elect Obama is stressing the need to create 3 million new jobs, we must understand that “JOB RETENTION IS AS IMPORTANT AS JOB CREATION”.

The NASE survey is at http://www.nase.org . See the NASE News for the Survey on Toxic Mortgages.

According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.

The solution lies in the hands of Congress as they meet in January to structure an economic stimulus package. Congress should take note of this survey and be “proactive” in addressing the situation, rather than “reactive” as the case has been in the Subprime Mortgage Crisis.

We can’t afford another shock to our economic system at this time. This 2nd Wave of Foreclosures which will be caused by the ALT-A and Option ARMs will not only result in Foreclosures, but also Job Loss.
dave c
December 27th, 2008 @ 10:49 am

We all are missing the main point. We legislated freedoms. Nobody gave them to us. We legislated workers rights. Nobody gave them to us. We legislated environmental rights. Nobody gave them to us. What has happened is simple the corporations have done what is best for them and went overseas to get around this and taken the jobs with them and trashed the environment and the workers both their and here.
We must legislate in domestic content and following of all environmental and work rules for corporations that do business in the US. Or they do not do business in the US.
We must legislate in common sense in real estate. You borrow money with some money down and assessors that do not let you borrow money on property that does not meet market value or you do not make enough money to pay the mortgage. Period.
Again this is all about legislation. Not bailouts to Dubia, and elected officials corporations.
Real estate values are too low on purpose, jobs are being lost on purpose in the US which are very economically feasible. This is all about corporations making more money then they need and our government making more money for them.
Julius Bannerman
December 27th, 2008 @ 12:17 pm

I am now paying six and a half precent, and its getting to be to much for an old retired person such as myself, If anyone has any advice for me in terms of how I might handle my problem, leave a message for me. At: u2cjb@msn.com
Chris Labovitz
December 27th, 2008 @ 2:28 pm

The mortgage crisis needs to be looked at from an entirely different perspective. The 700 billion that is being handed out should be “loaned” to home owners directly. The appraisal value minus the remaing mortgage value needs to be computed. This difference is paid off by the government loan. The values of these homes will cease to decline. The money lent to these individuals becomes the #1 lean on the property. The government will get this money back upon sale of the property. If the value does not recover and the sale price does not cover the difference between the amount owed and the true value “selling price” of the home, set up a new loan. At least people will be able to survive until this issue can be solved on a more long term basis.
Chris L
December 27th, 2008 @ 2:32 pm

Although there a many holes in my arguement……there may be some value to this perspective. I know one thing…I could use some help on the adjusted value (down 20 %) on my property versus the price I paid for it. My mortgage payment is like throwing water on a forest fire. If the value was adjusted, it would help. I can’t imagine the long term effects of my idea would work because of all the fraud that would occur.
Waytosouth
December 27th, 2008 @ 3:34 pm

We have become a nation that is not responsible for our actions. Whether it is our govenment, our corporations, or ourselves. The loan problem is caused by unresponsible lenders and unresponsible borrowers. The very easy fix is to force financials lenders to own up to their mistakes and extend mortgages out as far as it takes to keep homes out of foreclosure. The borrowers who are given this option most be forced to take it. It is a very simple fix and solution. If some one is stuck in a house for the next 50 years to pay off a loan they couldn’t afford initially…tough…live with your mistakes. If banks have their revenue spread out over 50 years as opposed to 30 years…tough…your mistake and live with it. The reality is that it is better for the banks, us, and the economy to keep people in their homes and out of foreclosure. Everybody needs to accept their mistakes and pay the consequences….bail outs are junk and need to be stopped. The money would be better invested in grants and loans to new small busines ventures needing cash to get start and in return creating jobs and tax base.

Once that is done, corporations that do business in the U.S. should be taxed on global revenues and not just in our Country. These loopholes need to be closed immediately.

The third step is to stop the inflation of corporate values through mass investment by mutuals funds. In the last twenty years company values as shown by stock prices have increased 800%. Show me one company other than walmart that has actually grown in value that much in the last 20 years. There are a few, but those aren’t the ones causing this problem. We have made corporations mega-rich by investing in them on a wholesale scale. These companies base their business models purely on stock growth and not sound business strategy. What strategy you say, let’s take all the middle class buying power from the largest consumer nation in the world to rise stock values. That didn’t work to good did it!
Mr. B
December 27th, 2008 @ 6:07 pm

“WaytoSouth is correct. I tried getting to Barney Franks and Chris Dodd with that idea of extending the time frame, leaving the interest rate alone for these mortgages. Most people in the past have lived in a house for a mean of 9 years. The mortggage co. gets their percent, the home owner gets lower payments due to the stretch out. Mortgage co. still gets it’s repaid principle instead of having to take a loss and a direct hit. Sure you have some inflation/deflation but keeps people in their houses, if they want, mortgage co. doesn’t have a covey of empty houses they can’t sell at retail but costing them taxes, declining values and deterioration. Do this only until everything get on it’s feet again. Thanks guys, Mr.B
dave c
December 27th, 2008 @ 10:43 pm

Lowering interest rates, extending the time frame will help. Taxing corporations with all income will help. But everyone is missing the elephant in the room.

JOB LOSS TO THIRDWORLD COUNTRIES so the corporations can get around, legislation to protect workers, and legislation to protect the environment and basically completely ignoring the will of the American people and bypassing all of our laws by offshoring production.

Homes now are worth less than it would cost to rebuild them. Homes in some cases are worth less than 10% of what it would cause to rebuild them. There is not a sub prime or mortgage problem, there is a job problem. The average person does not make enough money to make it and works two jobs!!!

Legislation is the ONLY way to stop job loss and create economically viable jobs. Legislate in domestic content!!! Period and stop lying to yourself that it is unamerican to be protectionist. America was founded on protectionism from Europe. America was founded on legislation to make, Americans PROTECTED from wealthy, rich, corporations and governments. PERIOD!!!! Everybody wake up before it is too late!

We right now have closed down every assembly plant in the United States because most people are scared to death to buy a new automobile. These plants are the most economically functioning plants in the history of mankind. AND THEY ARE SHUT DOWN!!! WHAT CRAZYNESS!! They are mostly automation and robots which need to be running to produce goods. Not sit idle while we hire another 100,000 third world workers!

This in itself is creating a depression!

Economics are really simple. Create more with less people, less material and less environmental impact. Otherwise you will have economic recession or in our case economic depression while the technology of the world is better than ever in the history of mankind.

So I say again legislation is the only way to improve the #1 problem with our economy which is jobs.

Legislate in domestic content and all corporations which do business in the United States must follow our laws no matter were they manufacture there products. OR they do not do business in the US. PERIOD!
Real Estate Secret Info » Blog Archive » Subprime Blogger » If You Think Mortgage Rates are Low Now, Wait …
December 28th, 2008 @ 2:50 am

[...] unknown wrote an interesting post today onSubprime Blogger Â» If You Think Mortgage Rates are Low Now, Wait …Here’s a quick excerptIt seems like the perfect time to refinance your home or jump in and get that first mortgage, right? Well, if you think mortgage rates are low now, just wait until the Christmas retail sales come in and the commercial real estate market … [...]
Subprime Blogger » 2008 Most Influential Posts at Subprime Blogger
January 2nd, 2009 @ 11:10 am

[...] If You Think Mortgage Rates are Low Now, Wait Until You Read This – An interesting perspective on the future of mortgage rates as there is a strong possibility of a commercial real estate collapse. [...]
jupitersgrl12
January 6th, 2009 @ 10:59 am

My solution is to provide a window period in which all loans made between 2003 to 2008 would be non-qualifying assumptions. Period. Watch and see how the market corrects itself. Do you believe that people would take an overpriced property just to own it for whatever the seller wants for down payment? Yes they will. This is the easiest, cheapest fix posiible.
Subprime Blogger » Mortgage Rates Will Continue Lower, But…
January 6th, 2009 @ 7:17 pm

[...] If You Think Mortgage Rates are Low Now, Wait Until You Read This! [...]
Yishai Kagan
January 10th, 2009 @ 7:58 pm

Low interest rates are great for refinancing, which is great for us and no use to the economy.

People will start buying houses only when the down payments are low.

The government today insists on high down payments, especially for investment houses (about 1/3 of Americans rent; somebody else is buying the houses they live in, and those guys are not “flippers”.)

House prices will continue to drop even if interest rates are 0% because people are unable to afford the higher down payments.
estone
January 12th, 2009 @ 9:02 pm

I agree with Dave C in the statement he made: “JOB LOSS TO THIRDWORLD COUNTRIES so the corporations can get around, legislation to protect workers and legislation to protect the environment and completely ignoring the will of the American people and bypassing all of our laws by off shoring production.”

This is a crime, sending all our telemarketing jobs to India, and we cannot even understand there English which the hack at your ear on the phone. I am just screaming in my head about all the job loss to other countries, because the Corporations are escaping, Unions proper honest days wages for a person to produce a product. This is Evil, Corporate America is selling out on Corporate America.
If the Payroll is moved out of the United States what is it doing??? its like letting the air out of a balloon and watching it fly all over the room. They are empting our economy
Julius Bannerman
January 16th, 2009 @ 8:50 pm

I believe this ecomomic down sparrow we have at hand has been cause my many things, including energy we buy from foreign nations. I believe we should build more nuclear power plants right here in america. France has prove they are very safe, plus the removal of the waste. The good, clean energy we can use for the good of the country. Go to my website for more at: http://www.ne-gear-west.webs.com
Subprime Blogger » Refinance Today? Is It Right For You?
February 13th, 2009 @ 11:02 pm

[...] If You Think Mortgage Rates are Low Now, What Until You Read This! [...]
Church of Cowherd » Retail Bailout? More Retailers File Bankruptcy
February 20th, 2009 @ 7:22 pm

[...] December, Suprime Blogger wrote about the Commercial Real Estate Collapse and its possible effects on mortgage interest rates. Since then, almost every since retailer has [...]
Gaey Schneider
March 8th, 2009 @ 5:47 pm

In the words of “Humprey Bogart” I like living below my means”
Also, get rid of those damn “Credit Cards”
GARY
renee
March 12th, 2009 @ 9:32 am

Job loss is definately the problem. Bill Gates laid off employees, after they were forced to train their replacements, so their jobs could jobs could be moved to India and S. Africa, I believe. No wonder he’s still the richest man in America, just above Warren Buffet. These men, and all the other capitalists, (CEO’s, mutual fund managers, etc.) got wealthy at the expense of us American consumers and investors, yet they no longer want to pay us to manufacture their products or facilitate the support for them. Their wealth now comes from American consumer prices, but foreign wages. It’s no wonder foreign countries don’t buy more from us. We cost too much, our wages are too high. Each country either has to manufacture and buy their own products and services, or this is bound to continue. Anything another country can produce, we can also, and vice versa. There are few countries that can afford our products. Third world countries most certainly cannot. We souldn’t even expect China or India to buy from us, but then we shouldn’t buy from them either. Any of us that whines about prices here should take a look at how often you’ve asked for a raise. It’s all relative. You want a raise, your employer has to raise prices, and it goes on and on. One of our former Presidents suggested we put a freeze on all wages and prices, and no one wanted that. That would have been a wonderful idea. We probably wouldn’t be in this mess now. The suggestion about losing the credit cards was great. If you can’t afford what you’re buying, wait until you have the money, or you’ll never get out of that hole. Everything bought with credit costs several times more; that’s ridiculous!!! Pull your heads out of sand and think a little. This didn’t have to happen. Obama wants us to tell him our suggestions, write to him at this government website. Telling us here might get us some satisfaction, but they want to hear from us.
Subprime Blogger / Commercial Real Estate Collapse Inevitable
March 31st, 2009 @ 11:52 am

[...] day after Christmas last year, I wrote the article “If You Think Mortgage Rates Are Low Now; Wait Until You Read This.“ The main point of the article was to illustrate the coming commerical real estate collapse [...]
Subprime Blogger / Daily Mortgage Rates News - Commercial Real Estate Collapse Continues
May 31st, 2009 @ 8:44 am

[...] reported on Subprime Blogger way back in December, the commercial real estate collapse is inevitable. Corporations are not willing to pay the high cost of rent when many of their [...]
Daily Mortgage Rates News – Commercial Real Estate Collapse Continues
July 2nd, 2009 @ 3:22 pm

[...] reported on Subprime Blogger way back in December, the commercial real estate collapse is inevitable. Corporations are not willing to pay the high cost of rent when many of their [...]