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Us Mortgages: Bracing For 6%

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http://money.cnn.com/2005/10/11/real_estat...dex.htm?cnn=yes

30-year mortgage rates look set to rise above 6 percent for the first time since July 2004, potentially helping set the stage for a slowdown in home sales.

Freddie Mac reported last week that the average rate on 30-year fixed-rate mortgages rose to 5.98 percent.

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US rates:

Today's National Averages:

Loan Type Rate APR

30-yr Fixed 5.59% APR 5.77%

15-yr Fixed 5.17%/5.46%

5/1 ARM 5.16%/6.26%

BIG increases in just one week--the momentum upward is gathering pace. 6.26% represents an almost doubling from a couple of years ago when you could get an ARM for under 4%.

In the "froth markets" over 80% of loans were funded by ARMs--Adjustable Rate Mortgages. These move in line with the 10 year Treasury Bonds.

However, in order to facilitate people who could not afford to buy homes at inflated prices the lending industry (with a little help from the world-wide glut of cheap money) turned to "innovation" to help buyers. Interest only loans with baloon payments formed a large proportion of the ARM loans. The industry is now having to brace itself for judgement day when these loans suddenly turn into reality and monthly payments rise by 50% or more.

The US HPC will probably follow the UK by about 6 months as it did during the "Great Crash" (the one that came at the end of the 80's). Their market, like ours, is like a roller coaster that has been climbing the big dip, it is reaching the top and is starting to creak and groan as it approaches the thrilling free-fall to the downside.

At this moment the market is just a few feet from gaining momentum to the downside. As I read the various threads on HPC.com it seems that the UK is already on the downward slope but momentum has not yet picked up enough that we are feeling the wind in our hair. It will probably take 3 months or so before the knuckles turn white and the forces of gravity pin the skin back on our faces :D According to "The Graph" on the home page of this website the dip the other side will, if history repeats, be 50% of the peak or about 65%. Quite a nice dip.

Anyone noticing how the EAs are starting to talk the market down in order to earn commissions in an otherwise frozen market? Went in to Evesham, WORCS yesterday and looking into EA windows there are a lot of "new prices" on detail sheets and we all know they are not HPI.

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According to "The Graph" on the home page of this website the dip the other side will, if history repeats, be 50% of the peak or about 65%. Quite a nice dip.

I reckon in the South East property will drop 33-40% from peak in the next couple of years

That will be the paper/MEW value or selling a nice home or if you take you can take your time to find the right buyer

Distressed/forced/inheritance sales IMO, will be 50%+

Thats more or less what happened last time

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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