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Mortgage Market Reopens to Risky Borrowers

wsj.com

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Re: Mortgage Market Reopens to Risky Borrowers

#111

Post by imtringued »

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

In times of low interest, house prices inflate because the payments are lower and the compounding effect is slower. This leads to bigger mortgages with long durations. During times of high inflation house prices go down because less people can afford it. Paradoxically you will end up paying far more money than you will save through the lower interest rate. Therefore it's best to buy your house when interest rates are high.

As usual, if you wait too long then you will miss out on potential gains. Starting as soon as possible tends to be more important than the specific time you start investing.

Re: Mortgage Market Reopens to Risky Borrowers

#112

Post by adanto6840 »

adanto6840 wrote: post #45

My question is, who is to say that X "FICO Score" correlates to anything too meaningful -- or that the score itself has not become harder or easier to obtain? Perhaps the data exists on this, but to my unresearched mind there's a lot of "fudging" potential within it all by itself. For instance, maybe the current 'borrower state' that gets you a 690 previously would have given you a 725; or maybe it's the opposite. I…

Hrm -- I'd love to be enlightened! I didn't word it very well, but my questions are primarily:

What oversight is there on the ratings agencies themselves? How do we know the distribution of scores is the same today as 10 years ago (and proportionate to credit-worthiness)? Is there anything that prevents credit-ratings companies from under/over valuing the credit-worthiness for large swaths of the population?

Is there historic data available to correlate "consumer credit score" to distressed notes -- and can that be done in a forward-looking manner, to exclude credit score 'fudging' as a factor, and to better be able to know that it's apples-to-apples comparison historically speaking. Otherwise, could it not simply be that borrowers previously known as higher-quality borrowers are simply being rated more poorly/cautiously, for instance? I'm not saying that is the case, but I've always felt that the incentives seemed strange.

Are credit rating agencies paid (by lenders) based upon their prediction accuracy?

Re: Mortgage Market Reopens to Risky Borrowers

#113

Post by Jgrubb »

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

We bought in 2006, and the value of our house is not likely to recover to what we paid then in my lifetime.

Re: Mortgage Market Reopens to Risky Borrowers

#114

Post by grenoire »

bakuninsbart wrote: post #50
tryitnow wrote: post #26

Earlier quoted context omitted.

I think that explains only part of the problem. The other problem is that for-profit media would never have an incentive to hire journalist with quantitative skills. There's very little demand for it outside of trade and professional presses and I would bet media companies would have to pay quant journalist at least twice as much as regular ones. So why should media companies hire and publish quant journalists? There…

How about The Economist? I feel like they are doing a good job at a middle path.

There is genuine critique about the inexperienced writers of The Economist (https://www.theatlantic.com/technology/archive/1991/10/-quot...) —however, still much better than any other print media, it seems.

Re: Mortgage Market Reopens to Risky Borrowers

#115

Post by xivzgrev »

Eventually the piper needs to be paid. If people are taking more measured risks in search of growth vs outlandish, then eventually we will see a gradual contraction vs sharp correction. They will expand bit by bit into risky waters, get hurt a little, but and pull back, but not so sharply.

Or maybe everyone is just fooling themselves that this time will be different

Re: Mortgage Market Reopens to Risky Borrowers

#116

Post by kurtisc »

esoterica wrote: post #102
kurtisc wrote: post #55

Earlier quoted context omitted.

I've noticed a trend on BBC news. '[X market/stock] slumps as [thing related to X] [does something]' Yet when you go and look at the long-term graph, it's well within normal variance. There's no evidence they're connected at all. I'm sure it happens with other media providers too. Why? Because they didn't have the numbers right, or just didn't check at all. Well, if I'd written a statement like that in an essay durin…

> Yet when you go and look at the long-term graph, it's well within normal variance. There's no evidence they're connected at all. What a completely mathematically and financially illiterate thing to say. Whether or not a market move is within “normal” variance has nothing to do with whether or not it is clearly attributable to a particular economic event. If Jerome Powell says something about rates or Trump tweets s…

>long term variance

That's not a phrase I used. I'm sorry the sentiment upsets you; please don't conflate it with mine.

Re: Mortgage Market Reopens to Risky Borrowers

#117

Post by zifnab06 »

luxuryballs wrote: post #89

Man I wish someone would give me a “risky deal” I am totally good for it but I just don’t have a decent enough down payment. Paying $2000/mo for rent sucks.

I bought my place at a ~5% interest rate for 3% down (about 20k). I'll have PMI for a few years but...well, it's nicer than renting.

Re: Mortgage Market Reopens to Risky Borrowers

#118

Post by Simon_says »

buttcoinslol wrote: post #92
kurtisc wrote: post #55

Earlier quoted context omitted.

I've noticed a trend on BBC news. '[X market/stock] slumps as [thing related to X] [does something]' Yet when you go and look at the long-term graph, it's well within normal variance. There's no evidence they're connected at all. I'm sure it happens with other media providers too. Why? Because they didn't have the numbers right, or just didn't check at all. Well, if I'd written a statement like that in an essay durin…

The problem is that "Sellers outnumber buyers as equity markets fall" and "Buyers outnumber sellers as equity markets post gains" are not compelling headlines. As you've noted, financial news is post-hoc analysis. It is narrative-based, and not fact-based. Sometimes the narratives and facts coincide, though.

> "Sellers outnumber buyers as equity markets fall"

> "Buyers outnumber sellers as equity markets post gains"

And those statements aren't even necessarily true.

Re: Mortgage Market Reopens to Risky Borrowers

#119

Post by proverbialbunny »

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

No body knows, but looking at geography gives a good idea of what future house prices will be. Is there a limit on land (surrounded by mountains, water, or similar)? If so, then house prices will go up, and new property will have to be built up instead of out. Both Seattle and the SF/Bay Area are like this.

Now, if you expect an economic down turn, there might be less people working and people who can't afford their mortgage, but imho that's not going to dent house prices in areas like these much, unless the downturn is for something like a decade. However, cities with sprawl or are effected heavily due to downturn will have a more variable price. A notable example is Las Vegas, where the majority of the industry is funded through tourism.

Re: Mortgage Market Reopens to Risky Borrowers

#120

Post by marcosdumay »

kube-system wrote: post #62
magashna wrote: post #43

Earlier quoted context omitted.

>So why should media companies hire and publish quant journalists? There's no good reason. So that you can take them seriously. Then again, modern journalism is such a joke I don't know if this is a worthy endeavor

Do they need you to take them seriously in order to support their revenue stream?

Advertisers used to have to take them seriously. But thanks to the new revolution of commoditized ads, they don't anymore.
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