What affect with President Bush’s freeze on mortgage rates have on the economy?
It will keep the housing market prices over inflated. This will lead to a further slow down in home purchases. Those who do not deserve their homes will be rescued. Those who made good decisions will now either be robbed buying over priced property or not allowed to purchase at all do to the inflated prices.
Rather than allowing the market to correct itself, Bush in all of his infinite wisdom just made home ownership that much less viable for those who believe in sound investments. What foward thinking person would want to pay over inflated prices for a home?
My home value is increasing due to Bush’s bailout. Unlike some, I’m not an all-about-me American. Some will say they think its great because it is good for them and very few others.
Econ Question, housing prices/mortgage rates?
I answered the question but i’m not sure if my answer is fully correct or if i need more information
Here is the question:
You read in the newspaper the following two pieces of information: First, mortgage rates rise from 6% to 8% and second, the expected rate of increase in housing prices rises from 4% to 8%. Do you think this news can affect people’s decisions on buying houses? How and why?
Im thinking that this news will negatively effect people to buy houses becuse houses will be more expensive and the cost of maintaining the house will also require more funds. However, I don’t really know if it can positively effect people as well because since housing prices go up, there is a greater rate of return on the house (i’m not sure if I got this right).
Can you tell me if I said something that was off or I can add something to my argument. Thanks xD
If this news gives real interest rates then in short-run people will buy less houses (if they don’t expect interest rates to rise further). But it’s consequence of fall in supply (houses will be sold for higher prices) on demand-supply graph and fall in demand (higher housing costs).
In case if news gives you nominal rates then conclusion may depend on people nominal income expectations or inflation rate.
Federal Reserve’s ability to affect availability of Mortgage Funds ?
Based on what you have read in the textbook, heard on the news, researched on the internet or read in various publications, how much influence does the Fed have over long term mortgage rates? If yes, why and how and if no, why not and what does influence mortgage rates. Cite your sources.
Cite my sources????
Do your own homework.
Why does Bank or England base rate effect my mortgage rate when the BOE does not lend money to banks?
Following recent news, I discovered that the Bank of England lends money only as the “lender of last resort”. If the BOE does not reguarly lend money to banks (i.e. my mortgage is not underwritten by BOE loans) why does BOE base rate have a direct effect on my mortgage?
Because BOE base rate establishes the rate in which your bank will pay if they need the cash. In other words, BOE is the cost of money for your bank. Obviously, your bank has certain amount of risk when it lend money to customers, they will charge a bit more than their cost for taking the risk. So a borrower like you will pay a bit higher than BOE base rate.
Subprime mortgage rate freeze plan: what kind of rates are we talking about?
From articles like this:
I’ve been reading about plans involving lenders freezing rates for subprime mortgages at their “teaser” levels for up to seven years. What nobody is mentioning is what these teaser rates are, and what these rates will reset to. When I think of a teaser rate, I think of something around 4% that would reset to something in the neighborhood of 6%, but that’s for a borrower with a 700+ credit score. Based on personal experience or understanding of this issue, can you provide examples of what the note rates on these mortgages currently are and what they may reset to?
So far Treasury secratary Paulson hasn’t worked out the rate scale yet to deal with this. But many question it.
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