LDS Freedom Forum

Mortgage Rates Fall Again; 30-Year Fixed At 4.54% - Freddie

U.S. mortgage rates fell again in the past week, with the average rate on 30-year and 15-year fixed-rate mortgages furthering record lows, according to Freddie Mac's (FMCC) weekly survey of mortgage rates.

Rates have remained at or near record lows as the Treasury market has rallied amid stock-market volatility.

shadow wrote:Unfortunately most people don't have the money up front to pay for a house so they need a loan. Credit costs money, it isn't free (to the consumer lol). Because I don't have the money to flat out buy a home, I'd rather pay a premium and have a mortgage and buy it over time than live in a van down by the river. Now is a great time to refi if you can qualify but even at these low low rates if I were a renter I'd probably still rent. I know the bubble is still too inflated.

Col. Flagg wrote:http://online.wsj.com/article/BT-CO-201 ... 15461.html

Mortgage Rates Fall Again; 30-Year Fixed At 4.54% - Freddie

U.S. mortgage rates fell again in the past week, with the average rate on 30-year and 15-year fixed-rate mortgages furthering record lows, according to Freddie Mac's (FMCC) weekly survey of mortgage rates.

Rates have remained at or near record lows as the Treasury market has rallied amid stock-market volatility.

4.54%... after falling again? Let's put this into perspective... the average home price right now in the U.S. is about $250,000. The monthly payment on a $250,000 loan would be around $1,300. If your interest rate on that mortgage is 4.54% and you're starting anew, your monthly interest payment starts out at $945.83, meaning $354.17 of the $1,300 goes to principal. And homeowners are supposed to be excited over a rate like that? You can clearly see the immorality and usury being employed by financial institutions. Worse yet, credit card companies charge anywhere from 9% to 29% and in some cases, more. Here's something to sink your teeth into... a 29% interest rate on a $250,000 mortgage would result in a monthly interest payment of $6,041.67. Even just a 9% interest rate on a $250,000 mortgage would start out at a monthly interest payment of $1,875. Of course, these are unrealistic interest rates for mortgages, but it shows you the fleecing and greed emenating from our financial institutions.

Hyrcanus wrote:

Col. Flagg wrote:http://online.wsj.com/article/BT-CO-201 ... 15461.html

Mortgage Rates Fall Again; 30-Year Fixed At 4.54% - Freddie

U.S. mortgage rates fell again in the past week, with the average rate on 30-year and 15-year fixed-rate mortgages furthering record lows, according to Freddie Mac's (FMCC) weekly survey of mortgage rates.

Rates have remained at or near record lows as the Treasury market has rallied amid stock-market volatility.

4.54%... after falling again? Let's put this into perspective... the average home price right now in the U.S. is about $250,000. The monthly payment on a $250,000 loan would be around $1,300. If your interest rate on that mortgage is 4.54% and you're starting anew, your monthly interest payment starts out at $945.83, meaning $354.17 of the $1,300 goes to principal. And homeowners are supposed to be excited over a rate like that? You can clearly see the immorality and usury being employed by financial institutions. Worse yet, credit card companies charge anywhere from 9% to 29% and in some cases, more. Here's something to sink your teeth into... a 29% interest rate on a $250,000 mortgage would result in a monthly interest payment of $6,041.67. Even just a 9% interest rate on a $250,000 mortgage would start out at a monthly interest payment of $1,875. Of course, these are unrealistic interest rates for mortgages, but it shows you the fleecing and greed emenating from our financial institutions.

I think there are tons of problems with our existing financial system. I actually think Mortgage rates are too low, in fact they're obviously too low when you look at the credit risk profile for a qualifying borrower. 30 year mortgages are ridiculous anyway, no one should put themselves into debt for the next 30 years.

Part of the problem you're seeing isn't actually with interest rates on mortgages, but just the price of homes. They've exploded in value and still aren't down to expected value levels, mostly because we still have a crazy economy half propped up by the insane amount of debt most people will tolerate in their lives. Houses, Cars (!), Credit Cards, etc.

singyourwayhome wrote:One of the 'immoral' issues of mortgages is the way they are paid, with the amortization schedule. If you refinance, sure, you get a lower rate, BUT- the first years of a mortgage are the most expensive, as Col. Flagg pointed out. At the beginning, most of your payment goes to interest, with little going to principal. If you have been paying on a loan for 10 years, you've now got a considerably higher percentage of your payment going towards principal. If you refinance, you've voluntarily reduced that amount, as you're paying higher percentage interest again.
I figured that one the hard way. We lived in one house for two years, sold it and bought a cheaper house, following Pres. Hinckley's advice to get out of debt and have a 'modest' home. Even though there was a $30,000 price difference between the two homes, over the life of our current loan, we'll be in the SAME place financially. Mostly because we started a loan all over again, though there was also a 1/2% increase in interest rates. So even though rates have dropped a whole percentage from what we currently have, we are NOT refinancing. No thanks. We've got 6-7 years left on this loan, and I am not going back to the expensive beginning.
And as for not getting out of debt any faster, at least we've had confirmations that we now are in the house/ward/neighborhood the Lord wants us in!

singyourwayhome wrote:One of the 'immoral' issues of mortgages is the way they are paid, with the amortization schedule. If you refinance, sure, you get a lower rate, BUT- the first years of a mortgage are the most expensive, as Col. Flagg pointed out. At the beginning, most of your payment goes to interest, with little going to principal. If you have been paying on a loan for 10 years, you've now got a considerably higher percentage of your payment going towards principal. If you refinance, you've voluntarily reduced that amount, as you're paying higher percentage interest again.
I figured that one the hard way. We lived in one house for two years, sold it and bought a cheaper house, following Pres. Hinckley's advice to get out of debt and have a 'modest' home. Even though there was a $30,000 price difference between the two homes, over the life of our current loan, we'll be in the SAME place financially. Mostly because we started a loan all over again, though there was also a 1/2% increase in interest rates. So even though rates have dropped a whole percentage from what we currently have, we are NOT refinancing. No thanks. We've got 6-7 years left on this loan, and I am not going back to the expensive beginning.
And as for not getting out of debt any faster, at least we've had confirmations that we now are in the house/ward/neighborhood the Lord wants us in!

singyourwayhome wrote:One of the 'immoral' issues of mortgages is the way they are paid, with the amortization schedule. If you refinance, sure, you get a lower rate, BUT- the first years of a mortgage are the most expensive, as Col. Flagg pointed out. At the beginning, most of your payment goes to interest, with little going to principal. If you have been paying on a loan for 10 years, you've now got a considerably higher percentage of your payment going towards principal. If you refinance, you've voluntarily reduced that amount, as you're paying higher percentage interest again.
I figured that one the hard way. We lived in one house for two years, sold it and bought a cheaper house, following Pres. Hinckley's advice to get out of debt and have a 'modest' home. Even though there was a $30,000 price difference between the two homes, over the life of our current loan, we'll be in the SAME place financially. Mostly because we started a loan all over again, though there was also a 1/2% increase in interest rates. So even though rates have dropped a whole percentage from what we currently have, we are NOT refinancing. No thanks. We've got 6-7 years left on this loan, and I am not going back to the expensive beginning.
And as for not getting out of debt any faster, at least we've had confirmations that we now are in the house/ward/neighborhood the Lord wants us in!

Col. Flagg wrote:I have no problem with costs being incurred to finance something if you can’t pay for it outright… it’s the method employed for interest calculation that I have a problem with!

IMHO, if a business was ethical and not full of greed, interest would be computed like this: $250,000 X .0454 = $11,350. Thus, the total for the house is $261,350. Instead, that calculation is done on an annual basis (obviously, the monthly interest goes down a bit with each passing year as the principal decreases, but you can see the exorbitant amount of interest going to the stinking bank). It’s the interest rate being leveled against you PER YEAR where the problem and usury is. When you finance something, your total cost to finance it should never end up being 2-3 times the original purchase price… that is outright immoral and theft!

Hyrcanus wrote:

singyourwayhome wrote:One of the 'immoral' issues of mortgages is the way they are paid, with the amortization schedule. If you refinance, sure, you get a lower rate, BUT- the first years of a mortgage are the most expensive, as Col. Flagg pointed out. At the beginning, most of your payment goes to interest, with little going to principal. If you have been paying on a loan for 10 years, you've now got a considerably higher percentage of your payment going towards principal. If you refinance, you've voluntarily reduced that amount, as you're paying higher percentage interest again.
I figured that one the hard way. We lived in one house for two years, sold it and bought a cheaper house, following Pres. Hinckley's advice to get out of debt and have a 'modest' home. Even though there was a $30,000 price difference between the two homes, over the life of our current loan, we'll be in the SAME place financially. Mostly because we started a loan all over again, though there was also a 1/2% increase in interest rates. So even though rates have dropped a whole percentage from what we currently have, we are NOT refinancing. No thanks. We've got 6-7 years left on this loan, and I am not going back to the expensive beginning.
And as for not getting out of debt any faster, at least we've had confirmations that we now are in the house/ward/neighborhood the Lord wants us in!

The imbalance in interest to principal is there to create an even payment across the life of the loan. They could do it more like a credit card minimum payment, where every month you'd pay all the interest that was due, + 1% of the principal balance (or in the case of a 30 year mortgage .3% of the original principal balance). That would lead to huge payments at the beginning and a small one at the end of the loan.

Col. Flagg wrote:I have no problem with costs being incurred to finance something if you can’t pay for it outright… it’s the method employed for interest calculation that I have a problem with!

IMHO, if a business was ethical and not full of greed, interest would be computed like this: $250,000 X .0454 = $11,350. Thus, the total for the house is $261,350. Instead, that calculation is done on an annual basis (obviously, the monthly interest goes down a bit with each passing year as the principal decreases, but you can see the exorbitant amount of interest going to the stinking bank). It’s the interest rate being leveled against you PER YEAR where the problem and usury is. When you finance something, your total cost to finance it should never end up being 2-3 times the original purchase price… that is outright immoral and theft!

You're talking about borrowing money from someone for 30 years. The interest rate charged is going to be a function of the market though. Only getting a 4% return on their money over 30 years would be insanity in any market. Imagine if you were starting a business and you wouldn't get the money you invested out of it for 30 years, and then only with a 4% return. There is no way the risk would be worth the infinitesimal return.

Col. Flagg wrote:

Hyrcanus wrote:

singyourwayhome wrote:One of the 'immoral' issues of mortgages is the way they are paid, with the amortization schedule. If you refinance, sure, you get a lower rate, BUT- the first years of a mortgage are the most expensive, as Col. Flagg pointed out. At the beginning, most of your payment goes to interest, with little going to principal. If you have been paying on a loan for 10 years, you've now got a considerably higher percentage of your payment going towards principal. If you refinance, you've voluntarily reduced that amount, as you're paying higher percentage interest again.
I figured that one the hard way. We lived in one house for two years, sold it and bought a cheaper house, following Pres. Hinckley's advice to get out of debt and have a 'modest' home. Even though there was a $30,000 price difference between the two homes, over the life of our current loan, we'll be in the SAME place financially. Mostly because we started a loan all over again, though there was also a 1/2% increase in interest rates. So even though rates have dropped a whole percentage from what we currently have, we are NOT refinancing. No thanks. We've got 6-7 years left on this loan, and I am not going back to the expensive beginning.
And as for not getting out of debt any faster, at least we've had confirmations that we now are in the house/ward/neighborhood the Lord wants us in!

The imbalance in interest to principal is there to create an even payment across the life of the loan. They could do it more like a credit card minimum payment, where every month you'd pay all the interest that was due, + 1% of the principal balance (or in the case of a 30 year mortgage .3% of the original principal balance). That would lead to huge payments at the beginning and a small one at the end of the loan.

Col. Flagg wrote:I have no problem with costs being incurred to finance something if you can’t pay for it outright… it’s the method employed for interest calculation that I have a problem with!

IMHO, if a business was ethical and not full of greed, interest would be computed like this: $250,000 X .0454 = $11,350. Thus, the total for the house is $261,350. Instead, that calculation is done on an annual basis (obviously, the monthly interest goes down a bit with each passing year as the principal decreases, but you can see the exorbitant amount of interest going to the stinking bank). It’s the interest rate being leveled against you PER YEAR where the problem and usury is. When you finance something, your total cost to finance it should never end up being 2-3 times the original purchase price… that is outright immoral and theft!

You're talking about borrowing money from someone for 30 years. The interest rate charged is going to be a function of the market though. Only getting a 4% return on their money over 30 years would be insanity in any market. Imagine if you were starting a business and you wouldn't get the money you invested out of it for 30 years, and then only with a 4% return. There is no way the risk would be worth the infinitesimal return.

I realize that, but in a situation where an interest rate was charged via the purchase price as opposed to each year of the loan for 30 years, what’s wrong with charging, say, a 19% interest rate? If you bought a $250,000 house, your total interest would be $47,500 and if the loan was for 30 years, that comes out to interest income per month for the bank of $131.94. Much more reasonable. Not only that, you have to keep in mind that banks are already getting away with murder by practicing 10% fractional reserve lending, so that $250,000 loan was originated on deposits at the bank totaling $25,000, which is a ponzi scheme in and of itself. The ‘Fed’ is the master at it.

Original_Intent wrote:Col Flagg and Singyourwayhome,

You are both completely confused about interest and amortization tables!

Original_Intent wrote:That is still only 1/2 a percent a year. Would you loan out $1000 for a year to get back $1005? Maybe you would because you are a nice guy, but you could not do that as a business.

Col. Flagg wrote:I realize that, but in a situation where an interest rate was charged via the purchase price as opposed to each year of the loan for 30 years, what’s wrong with charging, say, a 19% interest rate? If you bought a $250,000 house, your total interest would be $47,500 and if the loan was for 30 years, that comes out to interest income per month for the bank of $131.94. Much more reasonable. Not only that, you have to keep in mind that banks are already getting away with murder by practicing 10% fractional reserve lending, so that $250,000 loan was originated on deposits at the bank totaling $25,000, which is a ponzi scheme in and of itself. The ‘Fed’ is the master at it.

Hyrcanus wrote:

Col. Flagg wrote:I realize that, but in a situation where an interest rate was charged via the purchase price as opposed to each year of the loan for 30 years, what’s wrong with charging, say, a 19% interest rate? If you bought a $250,000 house, your total interest would be $47,500 and if the loan was for 30 years, that comes out to interest income per month for the bank of $131.94. Much more reasonable. Not only that, you have to keep in mind that banks are already getting away with murder by practicing 10% fractional reserve lending, so that $250,000 loan was originated on deposits at the bank totaling $25,000, which is a ponzi scheme in and of itself. The ‘Fed’ is the master at it.

The bank is charging you interest each year because they continuing to let you use their assets each year. A 4% rate is by no means usurious,

It is by the way it is calculated.

it only seems that way because you're borrowing an amount of money you don't intend to fully repay for 3 decades.

Seems? When people are paying banks 2-3 times the actual purchase price of a house in order to finance it, when no one can afford to pay for one outright as it is anyway, that is usury. The problem is that people do not have a choice... either they get taken by the banks in interest or they have no home.

Under a completely free market system, the bank is going to charge you interest based on their potential return from other investments. If they could put that $250,000 into a tractor manufacturing business and earn 10%, they aren't going to charge you .5% a year unless the delta between the respective risk profiles is that much different. You could reduce the term of the loan to 5 years, then the bank is making far less interest.

Who can afford to pay off a $250,000 mortgage in 5 years?

Fraction reserve lending is a whole different conversation. It would be interesting to discuss in a separate topic.

It's been brought up before in the past and discussed ad nauseum... the bottom line is that banks are in business to make a killing off people while trying to influence governments and other entities with money for power and control. Look at JP Morgan, Citigroup, Goldman-Sachs, etc... these institutions have become criminal operations with fraud, ponzi schemes, money-laundering, etc., all at the expense of taxpayers and citizens because of their immoral, greedy and illegal practices of lending/money creation. The 'Fed' itself is like a giant host with most of the other big banks acting as the parasite sucking the life out of everything for its own gain and power.

We're conflating all kinds of problems under the topic of mortgage interest rates. Someone flushing their equity so they can upgrade houses in a terrible market with foster kid payments has little to do with interest rates. You could take out all the problems with that transaction and the interest rates wouldn't change

LOL... these topics get diluted all the time and end up off track with other comments, etc... don't let it bother you.

Col. Flagg wrote:

Original_Intent wrote:That is still only 1/2 a percent a year. Would you loan out $1000 for a year to get back $1005? Maybe you would because you are a nice guy, but you could not do that as a business.

OK, so double 19 to 38%... now the bank gets $95,000 for loaning out $250,000 (or $263.89 per month). That is a far more ethical way of doing business instead of this APR garbage where $1,000 of a $1,500 payment goes to interest and eventually results in 2-3 times the original purchase price being paid! I get the whole 'can't do that as a business nowadays' thing, but that doesn't necessarily make it right, which is all I am trying to emphasize.

Col. Flagg wrote:
It is by the way it is calculated.

Seems? When people are paying banks 2-3 times the actual purchase price of a house in order to finance it, when no one can afford to pay for one outright as it is anyway, that is usury. The problem is that people do not have a choice... either they get taken by the banks in interest or they have no home.

Who can afford to pay off a $250,000 mortgage in 5 years?

Original_Intent wrote:That is still only 1/2 a percent a year. Would you loan out $1000 for a year to get back $1005? Maybe you would because you are a nice guy, but you could not do that as a business.

Jason wrote:Bring back the 16 to 20% interest rates of the 80's.....

Hyrcanus wrote:

Jason wrote:Bring back the 16 to 20% interest rates of the 80's.....

No thanks Jimmy!