Comments on: Are the low US home mortgage rates for real? http://blogs.reuters.com/christopher-whalen/2011/10/11/are-the-low-us-home-mortage-rates-for-real/ Sun, 22 Apr 2012 12:14:58 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: VoxNihili http://blogs.reuters.com/christopher-whalen/2011/10/11/are-the-low-us-home-mortage-rates-for-real/comment-page-1/#comment-1316 VoxNihili Tue, 11 Oct 2011 20:44:10 +0000 http://blogs.reuters.com/christopher-whalen/?p=743#comment-1316 Please remember that an unknown percentage of the high coupon loans have seconds which will need to be resubordinated. What do your numbers look like when you screen out the loans with seconds (and thirds)? Please remember that an unknown percentage of the high coupon loans have seconds which will need to be resubordinated. What do your numbers look like when you screen out the loans with seconds (and thirds)?

]]> By: E_B http://blogs.reuters.com/christopher-whalen/2011/10/11/are-the-low-us-home-mortage-rates-for-real/comment-page-1/#comment-1315 E_B Tue, 11 Oct 2011 18:03:46 +0000 http://blogs.reuters.com/christopher-whalen/?p=743#comment-1315 The proposal does seem intriguing, especially the elimination of reps and warranties. It looks like one of the last bastions of 5%+ coupons for state pension funds and the like would go the way of the dodo. My real concern is with this paragraph: "Every homeowner with a GSE mortgage can refinance his or her mortgage with a new mortgage at a current fixed rate of 4% or less, with the rate subject to change up or down with the price of Agency pass-through Mortgage-Backed Securities (MBS)..." So instead of floating rate covered bonds fixed to CIBOR, as in Denmark, we'll have ARMs fixed to MBS prices/yields? That might be great for the time Bernanke has anchored expectations for continued low yields at various places on the curve, but if the secular trend in long bonds is turning, swapping a 5% 30 year fixed for an ARM may not look like the best decision in five years. The proposal does seem intriguing, especially the elimination of reps and warranties. It looks like one of the last bastions of 5%+ coupons for state pension funds and the like would go the way of the dodo. My real concern is with this paragraph:

“Every homeowner with a GSE mortgage can refinance his or her mortgage with a new mortgage at a current fixed rate of 4% or less, with the rate subject to change up or down with the price of Agency pass-through Mortgage-Backed Securities (MBS)…”

So instead of floating rate covered bonds fixed to CIBOR, as in Denmark, we’ll have ARMs fixed to MBS prices/yields? That might be great for the time Bernanke has anchored expectations for continued low yields at various places on the curve, but if the secular trend in long bonds is turning, swapping a 5% 30 year fixed for an ARM may not look like the best decision in five years.

]]> By: LeeAdler http://blogs.reuters.com/christopher-whalen/2011/10/11/are-the-low-us-home-mortage-rates-for-real/comment-page-1/#comment-1314 LeeAdler Tue, 11 Oct 2011 18:03:07 +0000 http://blogs.reuters.com/christopher-whalen/?p=743#comment-1314 Scandalous and outrageous. Scandalous and outrageous.

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