Mortgage Rates Spike - Biggest Jump Since '87

[Purveyor]

Source: CNN Money

Rate on 30-year fixed mortgages jump could climb higher still. One cause: Government's rescue efforts.

By Les Christie, CNNMoney.com staff writer
Last Updated: October 16, 2008: 10:24 AM ET

NEW YORK (CNNMoney.com) -- Low mortgage rates, the one bright spot in a devastated housing market, are on a rapid rise.

Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage has hit 6.46% - up from 5.94% the week earlier. That represented the largest weekly increase since April 1987, when the 30-year rose 0.84 points.

Bankrate.com also charted the spike. The investment Web site reported that the average interest rate on a 30-year, fixed-rate mortgage jumped to 6.74% on Wednesday from 6.2% the Wednesday before.

Translation: A borrower with a $200,000 mortgage would pay about $1,225 a month at 6.2%, and $70 more, $1,295 at 6.74%.

Mike Larson, an analyst with Weiss Research who participates in Bankrate.com's weekly mortgage rate surveys, expects to see rates top 7% in the next six months, and then turn back down.

Read more: http://money.cnn.com/2008/10/16/real_estate/end_of_low_mortgage_rates/index.htm

[whistle]

1. "30-year fixed-rate mortgage has hit 6.46% - up from 5.94% the week earlier"

...but almost nobody who wants a home can qualify for that rate as 20% down payments, points and credit ratings push rates much higher.

[nradisic]

2. Oh yeah...the bailout is working....

What the fuck are we going to do as a country if the banks, as it seems are still not willing to lend and are socking it to the people who are bailing them out? Are we screwed or is the government going to have to step in and just nationalize the banks and insurance companies?

Mortgage rates jumped by a mile, while the Fed lending rate is at 1.5%? That is called highway robbery.

[saigon68]

3. $1,295 at 6.74%. is Interest only

A 30 year mortgage is much higher

[w4rma]

4. That bailout is making matters worse, not better. (nt)

[onager]

5. I just got a personal hit on this

I'm working in Egypt, and leased my townhouse in Los Angeles to a really nice couple of young newlyweds.

This was a great deal for all of us. I kept their rent fairly low because I wanted them as tenants. The guy comes from an entire family of building contractors. He did some upgrades to the place and I offset the rent in return, etc.

They took out a 1-year lease last September. They really loved the house, and wanted to buy it. We had discussed an arrangement where part of their rent might go toward a down payment. I wasn't sure if I wanted to sell.

Just this week they informed that they have to move on Nov. 1. They can't afford the rent any more.

As for buying the place, they say no one will even talk to them without 20% cash down and spotless credit. They are young and don't have much of a credit history yet.

Dammit...