BiggerPockets

I personally think it's a good thing for us taxpayers.

There will be a lot of low-income group advocates that will make a stink about it, but in essence the free/private market will run its course.

If it does actually happen, I see a lot of private seller carry deals going on.

The higher priced stuff will take a hit, as less people will qualify under these newer (30% down, anyone?) standards. Of course all-cash buyers can & will do what they want.

As to whether it will happen, I personally hope so (of course after I get my share of cheap 30-year loans in place).

Great input so far, anyone else?

I don't think the lending guidelines will be all that much more stringent than before the bubble. Certainly won't see the kind of insanity we saw during the bubble with or without these quasi governmental agencies.

I do think 30 year fixed rate mortgages will disappear. They're essentially unheard of in Europe, where there is no equivalent of Fannie & Freddie.

May well be more variation in rates between good and weak borrowers. Look at car financing rates. Anywhere from 5% up to whatever the law allows. Realistically, other factors will dictate par rates, just like they always have.

If rates do end up being higher, overall, we, as taxpayers, should be happy. That indicates the government support was artificially keeping rates low. OTOH, I'm not optimistic this will keep those who want to make bucks at public expense from continuing to feed at the same trough.

Looking at the long term, inflation adjusted Case Shiller data (sorry, kind of an old chart), prices were roughly flat from the start of the recorded data (1890) until World War 1. 100 is the baseline. From the end of WWI until the end of WWII, prices were also roughly flat, and about 70% of the pre WWI baseline. Then, until the recent bubble, they were again roughly flat at about 110%. Fannie Mae was founded in 1938, and there was lots of money available to kick start the economy post WWII. Sound familiar? So, if Fannie (and Freddie) go away, I do think its possible we would settle at a new norm that is lower than 110%. OTOH, the bubble and all the disruption afterward makes it difficult to predict where we might end up. The demise of these agencies is just one factor.

I never worry about which way the wind blows. LOL! There are positives and negatives to almost all situations. :mrgreen:

Do you know what would happen to our country if interest rates were to rise to 10%? Our country would go bankrupt overnight! Interest rates are low because the feds want to keep it that way because they are paying interest on the national debt.

Nothing that drastic would happen. I'm absolutely certain. When I graduated from college and moved to Houston in 1982, OO mortgage rates were 15%. ARMs were very popular. That situation continued for some years. The first house I bought, in 1987, was with owner financing at 9% for 15 years. And I was happy to get it.

More evidence that 30 year fixed loans are only there because of FM & FM support is in the commercial space. I've not tried to get a commercial loan lately, but several people here have mentioned that long term, even 15 or 20 year, fixed rate loans are impossible to get. Bankers are only wanting to give 3-5 year locks. I agree 30 year is the way it works in our market now. But I believe that's only because FM & FM drive that market.

Mortgage Interest rates are determined by the treasury note, not other factors.

And the open market determines the rates on those notes. The Fed sets short term rates, but the market, which is driven by many different factors, sets long term interest rates. FM & FM are one factor.

No inputs from me, just a question. So I understand the fed has interest in keeping the interest rates low because of the national debt, so what would be possible catalysts for the rates to go up?

The Fed would raise rates to combat inflation. Since the Fed has a dual mandate to keep unemployment low and inflation low, it is acting differently from Europe who is raising rates because of inflation, with a single mandate.