Wednesday, Feb 27, 2008
Declining Home Prices, Rising Mortgage Rates
Wall Street Journal: Decline in Home Prices Accelerates
Posted by happyrenterz @ 01:24 PM (576 views) Add Comment
8 Comments
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1. happyrenterz said...
"The Fed's efforts so far to soften the blow of the housing slump with lower interest rates appear to be having a muted effect. Since September, the Fed has reduced its target for short-term interest rates by 2.25 percentage points to 3%. But some mortgage rates are actually rising, and those that are falling haven't fallen that much."
2. hpwatcher said...
For a minute...I thought this was the UK.
3. happyrenterz said...
I remember last year Crash "warning" banks to pass on rate cuts to mortgage rates. The market has different ideas about this. Little interest in lending to home buyers now. Different for farm land. A friend who frequents auctions says that houses don't even fetch the asking price any more. Whereas farmland auctions go for way over asking price. So the credit taps are still open for farm land, and why not with food prices going up so fast.
4. mark wadsworth said...
Nice chart! Why do we have central banks? It's not like they can influence interest rates - esp. long term ones - that much, and in any event, it is better to let 'the market' set interest rates.
5. Stevie Dee said...
@ Ivmreader, S2R1 & Happyrentz, can you guys look at the stock value of Google from 7thNovember 2007 and Gold Prices at the same time.. I think there is a link. Invert the graph on Google during this period.
6. M2 said...
The market DOES set interest rates, as Alan Greenspan himself has acknowledged.
Check out this piece over at EWI.
7. Plato said...
The real idea is so Banks can make nice big fat profits out of all this to replace their big fat losses as they are the beneficiaries of short term interest rate cuts. Banks will recover far more quickly(and so will their Shares) than Joe Public who is effectively subsidising them. CLEVER !!!! ( To any honest people I mean EVIL!!!!)
8. planning4acrash said...
Mark, central banks can control market rates so long as the market has faith in the bank's ability to control inflation, because market rates are the market's inflationary expectations. Higher market rates express that the market does not trust that the bank can control inflation. Rising commodity values, such as gold, oil, silver, platinum, etc, are following a similar patter, where people push wealth from fiat currencies that they have lost faith with due to inflationary expectations. Next come wage inflSo banks can control market rates by overshooting rates higher than they would have had to do previously. If the Bernake cuts contunue much further, we could see 5-10% inflation in the next couple years and 10%+ interest rates, along with a depression/recession. As others have mentioned, the other "way out" is Mugabe style hyperinflation.