It would be nice, and a great boon to mankind, if someone would create an app for your mobile device or TV that would flash a Big Red “BS” every time the media went overboard and off the track on a news item. The downside for those who watch a lot of CNBC is the screen would be flashing red all the time.
Favorite Theme: QE Tapered, Interest Rates UP, Housing DOWN, Economy Tanks!
This is a favorite subplot with the “glass half empty” crowd and it was one touched on this morning (10/11/13) in an interview by Aaron Ross Sorkin and revisited throughout the day by other CNBC anchors. In the attached clip discussing Wells Fargo’s earnings Sorkin asks some leading questions to his subject, possibly to elicit some negative response on the outlook for housing. Wells Fargo’s mortgage origination biz was down 30% in the quarter as a direct result of a 100 basis pt. spike in the 30-year fixed rate yield to 4.75% (on the mere threat of a taper). It was only 3.44% earlier this year, ergo many have stopped buying or refinancing till rates come back down. If they don’t retreat, kiss housing goodbye!
Are you worried yet?
If all this makes you a bit squeamish, let me provide a little perspective to put your nerves at ease. First of all take a look at this table from the beleaguered Freddie Mac (FORTY YEARS OF MORTGAGE RATES). Much of this will make the current 30-year rate look like a “Borrower’s Heaven.” This should also be of special interest to those in the Residential Real Estate Trade, potentially a great marketing piece to those with buyers on the fence.
Get a load of these NUMBERS!
Number One:–8.81%–This is the average rate for the 30-year mortgage over the past 40 years.
Number Two:–5.41%–This is the average rate for the 30-year over the past 10 years starting in 2002. During the six year run-up the 2008 housing bust the rate averaged 6.05%
Number Three–for a real scare take a look at the averages for the following periods:
1972 to 1982–10.2%
1982 to 1992–11.43%
1992 to 2002– 7.5%
A lot of homes were bought, sold and built at much Higher rates. 4.75 % is a real deal.
The Bottom Line: If someone has the desire and means to buy a house now, they have to be blithering idiots to wait for Lower rates. THEY ARE LOW!!! If for whatever reason they do go back down (probably a signal of horrible economic times), they can always refi.
Where is that Killer BS App when you really need it?
What do you think?
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.