A Spike In Residential Mortgage Rates
Readers discussed the rising interest rates as a topic. “A possible topic; the effect of suddenly higher interst rate.” “I did the calculations and basically one point (6% to 7%) on a 30 year fixed with 20% down adds $25k to the effective cost of a $250k home. More expensive homes see a greater cost increase, less expensive homes less. For those with a large downpayment (e.g. 50%) and using a 15-year fixed, the increase in buying cost is minimal.”
“Assuming that most folks have little downpayment and max out on the home they can buy, higher interest rates significantly reduce my competition. Time to low ball!”
One replied, “There is another way to look at this illustration. Suppose a budget-constrained household could have ‘afforded’ a $250K home before the rate increase. Now they can only afford a $227K home, roughly a 10% haircut in their maximum purchase budget ($250K X 250/275 = $227K). If everyone in the market simultaneously faced the same tightening of their purchase budgets, then I guess that would translate into a prospective 10% drop in market values?”
Another wrote, “It should translate into less purchasing power, and a drop in prices, right? Unfortunately, people haven’t been purchasing based upon what they can afford, but rather on what they want. This disease hasn’t yet been eradicated.”
One was more specific, “The severity of the rate hikes will dictate the impact…1/2 % will hurt but not cause a meltdown. If we get into the mid 7’s its fasten your seatbelt time particularly if jobless rate climbs into the 6’s.”
“Valuations over the past few years have been established with historically low interest rates and gimmicks…Mid 7’s will wipe out those spiked valuations bringing chaos to the markets, IMO. I hope it does not happen. It will not be fun no matter what position you are in.”
Another expanded the subject, “The higher the interest rate rises with falling house prices, even if rents stay stable, the easier it will be for me to pay my rent and add to my savings. But what’s going to happen to those who need to cover housing costs by selling over priced illiquid assests (art, old cars, jewelry, baseball cards, sports memob’ etc)? Should make for interesting times ahead.”
One reader has a target. “Death by a thousand cuts or 1/4% FED rate increases is soooooooo streching the bungi cord…let this whole load fall on the weight of ‘over-their-head-in-debt’ + ‘my-house-is-not-worth-what-I-paid-for-it-so-I-can’t-get-a-home-ATM-loan-anymore.’”
“I say: Please… some how… someway… make interest rates go to 15%… then we’ll all really know what a…1,000,000 million dollar house is worth. The rest of home prices can fall, where they fall.”
To which was said, “Make interest rates go to 15%? No es necessito. A clear indication that rates are marching up and home prices are falling in conjunction with restoration of underwriting standards (income verification, demonstrated ability to save money, etc.) and downpayment requirements would easily lop off 50% from current bubble market prices before rates reached 10%.”
The Hartford Courant. “A spike in residential mortgage rates is sending shock waves through a housing market that is already struggling both locally and nationwide, causing some buyers to drop out of deals and dashing hopes that the market is on the verge of recovery.”
“Mortgage broker Michael Menatian, of Sanborn Mortgage in West Hartford said he has already had one buyer back out of the market this week and is waiting to hear decisions from two others who are scrambling to see whether they can cover the costs of the higher mortgage rates. Other clients are switching from long-term, fixed-rate products to more risky adjustable-rate loans.”
“‘It’s only been a few days, and already we are seeing the effect of the higher rates,’ Menatian said. ‘Buyers that are in the market, but unsure or on the edge of what they can afford - they’ve walked to the sidelines. This is going to hurt.’”
“Beth Hough and her husband have had their Trumbull house on the market for slightly more than $400,000. They had hoped to purchase a larger home in nearby Monroe, priced between $500,000 and $550,000.”
“But the rapid rise in rates has dashed their hopes. The difference in the mortgage payment between rates of 5.99 percent and 6.75 percent rate on a $400,000 loan is an extra $210 a month.”
“‘It brought us over the edge in what we can afford. Two hundred dollars a month is a big difference,’ Hough said, especially when offers for her house have been lower than anticipated. ‘Two months ago, we were OK. But now things have changed, and we are in a position where we have to pull out.’”
This was also posted in the same thread:
‘FOR MATH GEEKS, ONLY — an explanation of how higher mortgage rates reduce purchase demand:
Let’s assume that every household has a monthly payment budget limit, even if it is not sustainable; call this amount P.
Also let a0 = initial mortgage commutation factor (which converts monthly mortgage payments into a home purchase) based on last year’s interest rate and a1 = commutation factor based on higher current rates.
Also, let P0 be the original mortage payment amount needed to buy a $250K home (as in the above example) and P1 the higher payment required to buy the same home at current interest rates.
The example given above effectively stated that
P0*a0 = $250K = P1*a1, where P1*a0 = $275K.
It follows that P1/P0 = $275/$250 = 1.1.
But if the most the hh could afford was (and still is) P0, then at the new interest rate, the most house they can buy is
P0*a1 = (P1/1.1)*a1 = (P1*a1)/1.1 = $250K/1.1 = $227K.
‘Economists would decompose the impact of this change in the relative price of a home into an income effect (real incomes fall when interest rates increase) and a substitution effect (to stay as well off as before, I might want to buy less house or no house given the new higher cost of buying one now), but the example illustrates exactly how the budget constraint tightens with higher rates.’
The above is an analysis of purchasing power for a borrower, which is the majority of new entrants into the market. The market is also composed of those who are purchasing without borrowing, so there is not a 1:1 correspondence with the decline above.
Nevertheless, the decline will be substantial imo.
Anyone who can purchase without borrowing also has the option to purchase other assets whose value will not drop like a falling knife. Of course, if you are wealthy enough to buy a home w/o borrowing in the California bubble zones, then what is +/- $200K to you, anyways?
JP –
Is there any available evidence on what percent of folks purchase w/o borrowing? At any rate, almost everyone in this category already owns a home, so when they purchase w/o borrowing, they also leave open one existing home that either has to be sold or added to inventory.
There are a few other factors hitting lending demand at the same time as rates are increasing:
1) The folks who threw their money away on subprime MBS on assurances that “subprime is contained” must be having serious second thoughts now that even the Fed has changed its tune. This will tend to dry up sources of funds to the subprime sector (and increase subprime lending rates as a consequence).
2) Lenders must be wondering how much of a down payment to require given rising lending rates and for-sale inventories, and falling home prices in order to avoid the falling knife impact of receiving REO which won’t sell for the loan balance.
3) All the talk from the Fed and other regulators about cracking down on loan fraud and making loans to people so they can buy houses they cannot afford must be at least making lenders wonder whether a crack down may actually follow all the saber rattling. Worrying about this scenario could scare some lenders into preemptively reverting to traditional underwriting practices.
Is there any available evidence on what percent of folks purchase w/o borrowing?
I have been working on this off and on, and I don’t have a good answer. The reason it came up for me: I would fall into this category. I was thinking of purchasing circa 2003 and leaving my vagabond ways. But I couldn’t get my head around the price of housing. (And my parents are in your second category; they would be looking to trade down.) Once I figured out that low interest rates were inflating prices, I realized that being a vagabond is underrated.
Also, I agree with your points 1-3. I think the of question “How much would prices decline given higher interest rates” will give rise to a bigger question still: “What fraction of the public will be able to afford a traditional downpayment?” One possible scenario might go like this:
1. Prices must decline in order to make demand equivalent. (That 250K asset becomes 227K)
2. The foreclosures concomitant with this decline forces a rethinking of the “proper” amount of down payment to prevent loss of capital. (Bank officers will go overboard to show how conservative they are, so they can keep their jobs.)
3. The demand for housing with the new down payment is (dramatically) lower. Prices must decline further.
A simplified analysis : 500k loan @ 7% = $30 k. A 400k loan @ 6% = $24k. Property Taxes are ~1k less (Prop13). No analysis of income tax effect. Result: Wait for bubble to pop, hiss, and collapse.
2. Lenders must be wondering how much of a down payment to require given rising lending rates and for-sale inventories, and falling home prices in order to avoid the falling knife impact of receiving REO which won’t sell for the loan balance.
Get Stucco, I don’t know that much about mortgages and financing, but it seems to me this is the crucial point looking farther into the future. Even if people don’t lose their jobs or become homeless, they will have to save significant amounts of money just to get into a house. This will affect people’s spending behavior and who knows what effects it will have on the overall economy, even if all the other inflation/deflation/dollar collapse nightmare scenarios don’t come to pass.
Put up earlier. But want people to see response from Gary Watts office to a letter I sent them. Comments? There were some from the desk clearing thread yesterday. THey did acknowledge some problems and was a nice response to my letter.
Original Message—–
From: Gary Watts [mailto:gary@impactre.com]
Sent: Friday, June 15, 2007 3:14 PM
To: ‘Donna’
Subject: RE: some questions on OC real estate going forward
Alan,
When I have time, I answer some of the more sincere emails and I find yours to be one of them. The first thing that I noticed is the 10 years you did not buy California real estate. It might have been because of what the San Francisco Examiner had forecasted in 1996: “a home is where a bad investment is!” That line may have kept you and others out of the housing market. Had you bought that $400,000 home, then sold in last year in California and moved to Albuquerque, you could have purchased at least 3 to 4 more homes, had no mortgage and more monthly income. I am happy that you did finally buy and that you love it there. In the future years, you should find that you made a great investment decision.
In California, the days of really big housing price run-ups are over for now and probably for quite a few years. However, despite what you read or hear in the media, the Bay Area and southern California are holding their own. Last month the Bay Area, even with declining sales, posted a new peak median sales price of $660,000 which represented a gain of 3.4% from May of last year. In southern California, even with declining sales, the median price rose 4.9% over the past 12 months to a new high of $505,000. Here in Orange County, our price was up but barely at 0.01% from last year. This is not bad when you consider all the media news about foreclosures, late payments, sub-prime collapse, etc. There are still so many buyers fence-sitting but I assume that a couple of more months of prices continuing to increase versus the same period last year, will get them back into real estate homeownership before interest rates begin to rise.
I am not naïve about the problem areas, especially the newer communities where a lot of building, exotic loans, and rising house payments are hurting buyers. When you look at the numbers, they are very small compared to all the homes, condos, mortgages that exist in this State. Today, the notices of default for the last quarter totaled 46,760. While that seems like a huge number, it represents only 0.008% of all mortgages in California – a number too small to effect or affect home prices in any meaningful way. Also, I should point out that only 11% of those “notices” actually end up as a foreclosure. The other 89% were successful is stopping the foreclosure by obtaining new financing or selling their home. By the way, last month 24 states saw a decline in their foreclosure starts. Maybe, just maybe things are near the end for those individuals who purchased a newer property near the beginning of 2005, with little or no money down, using the exotic loans. The good news is that when you measure those types of loans versus all mortgages in the U.S., they represent only ½ of 1% of all loans in the U.S.
I hope this clarifies some of your issues and in another year, we can once again compare notes and see how things are going. A year ago, many emailed me about the immediate Housing Collapse. Here it is a year later and despite what they have read in the media, most of the housing market is still in good shape.
Gary Watts
P.S. To address your other statement about people moving out of California, you are correct. Maricopa County in Arizona received 11,375 Californians in the past
year. Yet with all those departures – even to other states, the State of California and especially southern California still had positive population growth.
——————————————————————————–
From: Donna [mailto:donna@impactre.com]
Sent: Friday, June 15, 2007 12:30 PM
To: gary@impactre.com
Subject: FW: some questions on OC real estate going forward
—–Original Message—–
From: al jones [mailto:housingbubblesobstory@yahoo.com]
Sent: Thursday, June 14, 2007 10:34 PM
To: info@impactre.com
Subject: some questions on OC real estate going forward
Gary. I am a former California and Orange County resident. I made what seemed to be pretty good money working for Pacific Bell/SBC during 16 years in California. I made on average about $70,000 per year. When I got married, my wife made about $55,000. Together that appeared to well above the average income for CA. I couldn’t conceive of paying $400K for any home, yet alone $623K. Alas, I never purchased a home in CA (was in the Bay area from 1996 to 2006). We were finally disgusted with CA and I was burned out on my job. We moved to Albuquerque, bought a nice home for under $300K (2700 sq ft, one of best neighborhoods, safe). Even paying a fixed 30 yr, best interest rate note takes enough chunk out ($2200/mo) of our $100K income. This house would have been $1.3M in Irvine or East Bay area where I last lived. People like me are leaving CA in drove. The best proof is Uhaul one way rates. Lake Forest CA to Albuquerque NM $2176 and reverse was $360. That means 8 trucks leaving your area for my area for every one returning. I also did financial planning for a couple of years and the people’s finances were in terrible shape. Best example, a family where husband/wife made $13/hr bought a $850K house. They were told they had a $2000/mo loan that wouldn’t change. Well, fine print said differently. Those folks are probably a foreclosure statistic. There are 10 of thousands of such people in CA that bought into those suicide loans. It should be obvious the math doesn’t add up. How can you sleep at night pushing more people like this to financial bondage and future homeless people? How can prices in CA do anything but go way down? Is the undocumented workers picking strawberries at $15K per year going to keep buying the $720K homes (documented case of such in Hollister). Please advise. I will share your answer with thousands of interested folks if you have the courage to answer this email.
Thank you
Alan - a former CA resident and glad to be out of there. If more people knew how nice life was outside of the crime, traffic, smog, high cost, crowds, high taxes, subpar health care, falling apart infrastructure, etc even more would be leaving and CA will be left with the uber rich (Paris Hilton if she is out of jail) and the dirt poor (draining what is left of any public money). I don’t think Arnold can save the day here.
I am not trying to be mean, negative, or anything. I would just like some straight answers and not the NAR fluff.
Need to leave, that was a nice response, but he is still drinking the Koolaid. He points out that you could’ve bought 3-4 homes cash. My goodness, does he think everyone wants to be a landlord (alotta work there) and if everyone owns 3-4 homes, who is left to buy (taken to its logical extreme)? Notice he also uses the word investment. Never ceases to amaze. carlton Sheets’ mentality. If this was so easy, why are markets tanking everyday? Bottom line…prices are out of line with wages. People, as a rule, do not make 100K on average. With 2 incomes in major city areas, you might. But 600-700K homes are a stretch even on those incomes.
I guess his office doesn’t mind the serf for life mentality. I for one DO! I would rather rent and be entirely debt free otherwise than be debt free, but have a 5K a month mortgage, even if I made 200K a year, which I don’t.
I guess if you kep telling people that the norm is 660K for a home, the sheeple will believe it. Even when this bubble finally tanks in 5-10 years, the fallout from ugly credit, bad debt, bad taste in the mouth will linger for decades.
I HAVE SAID IT BEFORE AND I WILL SAY IT AGAIN. YOU CANNOT, I REPEAT CANNOT RUN AN ECONOMY ON DEBT INFINITELY. AT SOME POINT THE CREDIT WILL DRY UP!
Rant off.
“It might have been because of what the San Francisco Examiner had forecasted in 1996: “a home is where a bad investment is!” That line may have kept you and others out of the housing market.”
There will be many years of debate about “what happened” in 1994/1995. IMHO the SF Chronicle was right (hard for me to say the Chronicle was ever right!). The housing market might have kept collapsing if the fed had not changed its lending policies in 1994 and instead opened the money flood gates creating massive bubbles. It delayed the collapse by a dozen years, but the pain this time will be far worse than if the fed had allowed the recession to develop in 1994 /1995.
The vast amount of moneys created without an increase in real GDP is numbing. America’s bubble economy, buy Beanie Babies they only go up! Bonds, Stock, Housing, Art, Baseball cards - all bubbles. I am sure there are lots of bubble items that I failed to mention - so feel free to add yours.
“collector cars” is the bubble that most drives me nuts.
I don’t really care if people want to pay $2000 for Beanie Babies because it doesn’t affect the economy like stocks or housing. This housing crash will end with a steal government bailout via HUD/GSE. We won’t even know that trillions of our tax dollars were used to bail out the reckless Wall street fraudsters.
Given a choice, I would prefer a cheap house and a 15% rate.
There are several reasons for this.
1. A larger percentage of the monthly payment is tax deductable
2. Overpayments applied to principal will more rapidly put a big dent in the time to payoff.
3. In the future if rates again fall, I can refinance a small loan, rather than the current monster loans.
There are probably other reasons, but give me a cheap house and a high rate any day over an expensive house and a cheap rate. For me it is MORE than just the monthly payment. It is about being out of debt as fast as possible!
I just wonder how higher rates will hit the Manhattan market. The denial is still off the charts here. So are prices! They are selling $2.5 million condos on 50th St. and 8th Ave. That would be Clinton West. You may remember it best for the days when it was called “Hell’s Kitchen”. That neighborhood didn’t get it’s name from the Fox TV show starring Gordon Ramsay.
The neighborhood has been gentrified, they all say. The Port Authority Bus Station is still situated on 42nd St. and 8th Ave. if I recall correctly. That will never go away. The crowd for blocks around the PA Bus Station can be pretty rough. I wouldn’t want my wife walking by after dark. Any hard times return to this City and the characters will get rougher and rougher.
Closer to home is that disaster of districtny.com at William St. and Fulton. This is not a luxury area. The cheapest studio monstrosity is $540,000. The layout is awful. We have a place that is 5 times more functional and we pay $2,600 per month. The neighborhood is better too.
We will see who is buying $540,000 crappy studios as rates rise. There are so many stupid projects in my area. It will be funny to see their final fate. I think fiveninejohn.com (Five Nine John Lofts) is dead. There seems to be nothing going on there. I can only guess that it will end as rentals. Higher rates will be squeezing a lot of the “beautiful people” in this City. I am not one of the beautiful people. I am mildly handsome, at best, so I don’t need a $540,000 studio at any interest rate.
Agreed: The prices in NYC are INSANE. 2.5 Mil for a f$%^! condo ? Are they NUTS ? Lake Forest IL is where fortune 500 CEOs, celebrities live & mingle. 2.1 Mil gets you a recently built 4/4.5 (4291 sq ft) SFH w a 3 car garage, 4 fireplaces, .66 acres, near the golf course & no criminal activity to worry about. We have seen prices kited here too (~ double over 5 years). The working stiff who wants to live in a good neighborhood, in a SFH of 3/2.5 within 20 miles of downtown (and most of the jobs) is looking at 400K+
http://chicagotribune.2.homescape.com/SCS/listing_details.jsp?calling_page=listing_result_list&affiliate_name=chicagotribune&filter_max_price=2250000&geo_area_id=52029&filter_min_price=2000000&listing_result_page=listing_result_list&search_by_type=resale_mls%2Cresale_class%2Cresale%2Cnew_const%2Cnew_class%2Cnew_mls&display_default_state_id=51255&filter_product_id=22398719
I just wonder how higher rates will hit the Manhattan market.
Directly? Dunno. Indirectly? Devastating. I think Wall Street is all about borrowed money these days, so NYC is toast when the SHTF.
Our first house was like that. At the time interest rates were 21% (early 80’s). Prices of houses were low. We bought on purchase contract a house of a family friend whose parents had both gone to a nursing home. The gave us a rate of 12%, and we thought we had died and gone to heaven. We had 5 years until we had to finance thru a bank, but we knew we could afford 25% interest for all the more we paid for the house. Well we ended up building 4 years later on some land that we owned so we never had to refinance. Got a 15 year loan and it’ll be paid off in a couple of months. Soon you’re going to see a lot of land contract, and purchase contract sales. That’s what people do to get buyers who either don’t qualify for financing or the interest rates are too high, like in our case.
Yes, sellers would typically rather take paper that gives them a below-market interest rate on their proceeds than take a smaller amt for the sale. Indeed, tax policy encourages this attitude, since the gain on the house is tax-free but the income on the note is not. Ultimately, though, prices come down because lots of sellers are not really in a position to provide owner financing.
“Given a choice, I would prefer a cheap house and a 15% rate.”
GH, I couldn’t agree with you more. I tell people this all the time, and they stare at me like I have a third eye! The interest deduction on a 5% loan is chicken feed compared to the payment on todays monster mortgages.
Yup, many people fail to think of the fact that the principal actually has to be paid. Let’s say you bought a $600K Calif house ($8K/yr taxes?) on a fixed-rate 30-yr mortgage with (drum roll:) ZERO percent interest rate. So you are going to be spending $28K/yr on housing for the next 30 years, more than half of your (California median) income. Ugh. You could pray for wage inflation …
If high interest rates drive prices 50% down, you might have a reasonable chance of saving up a substantial fraction of the house price, especially if you are able to invest your savings in some high-interest instruments while you are in the saving mode.
“Given a choice, I would prefer a cheap house and a 15% rate.”
Me too. But many peopole are getting into the AMT range. Mortgage interest, municipal bonds, and such are not AMT exempt. Best deal in that case is to pay off the loan as soon as possible. But that’s favorable to a cheap house anyway. My next home home loan won’t be longer than 15 years. I’ll probably pay it off in ten years.
There are probably other reasons, but give me a cheap house and a high rate any day over an expensive house and a cheap rate.
Ditto, GH. One of the first indications I had that something was wrong was when a friend carefully explained to me that it didn’t matter that prices were so high, because interest rates were low and the monthly payment bla, bla, bla. I thought she had a point, so when I got home I ran two scenarios on an internet calculator and it told me that with the lower priced house at the higher rate I would be paying twice the amount of the loan in 30 years. In the other scenario, I was paying about two and a half times, but since the loan amount was so high, it ended up being ridiculous. I told her that, but she didn’t get it. Thank god for good old mortgage calculators.
Here is my reminder for the weekend of what the bubble was all about:
http://www.youtube.com/watch?v=y-AXTx4PcKI
Speculate, speculate, everyone was dreaming of riches, reality and reason be damned, and there is a whole business of shark brokers and Realtors™ happy to indulge those dreams… When I saw the D.R. Horton quote about signing anyone with a pulse, it reminded me… get them to sign on the line that is dotted…
That comment was on the blog yesterday. I can’t believe there won’t be legal repercussions for a CEO, if he really made such a statement. I expect some serious lawsuits to be waged against the HBs in the coming months.
Hey Jeff - you can get a one-way uHaul from San Diego to Salt Lake City (26 ft’ for 6/23) for the low price of $1726. Too bad the person who then rents it to take back to San Diego will only need to pay $270. (source uhaul.com). The Taco Bell on Ft Union Bl (1900 E area) and Highland Dr is begging for help.
“But the rapid rise in rates has dashed their hopes. The difference in the mortgage payment between rates of 5.99 percent and 6.75 percent rate on a $400,000 loan is an extra $210 a month.”
“‘It brought us over the edge in what we can afford. Two hundred dollars a month is a big difference,’ Hough said, especially when offers for her house have been lower than anticipated. ‘Two months ago, we were OK. But now things have changed, and we are in a position where we have to pull out.’”
If 200 dollars is going to make a difference in your decision to purchase a home, you really can’t afford it. These people are lucky that interest rates moved up as they would have certainly been foreclosed on, given that their margin of error is about 200 dollars a month! Are these people insane?!? What if you have even a temporary job loss? Or the transmission on your car goes? And these people want to buy a $500,000+ house?!? This still has a long way to go…
Oh, the loan amount is only 400,000; I guess that means they managed to gain about 100,000 in equity since they purchased the home.
I think this has to do with their ability to qualify. I doubt in reality these folks can afford the mortgage on a 200K house.
Agree.
I agree. The $210 increase p.m works to $2520 a year. Sometime ago there was an article on how increase in gas prices ($1500 a year) prevented people from buying. Imagine what will happen if one earning member of the household gets laid off or gets sick.
This also begs the question: how far people with savings are willing to go to save the house by dipping into their savings?
I’m amused by those noobs who talk as if 7% is some kind of crazy-high 70’s interest rate. I bought in ‘99 and my rate was 7.625%. Historicly, that’s a more typical interest rate. My last refinance in 2003 was for 4.825%. I’m happy, but I would NEVER have bought for what my house would have gone for in 2003.
Heck, it was 7% in early 2002, and that was down from the year prior. I remember thinking I got a deal when rates fell to 6.5% right before I purchased in mid-2002.
I also remember my parents having 13% rate in the early 1980s.
“…Mid 7’s will wipe out those spiked valuations bringing chaos to the markets, IMO. I hope it does not happen. It will not be fun no matter what position you are in”
From my position it will be great fun. After the last five years of watching co-workers and relatives strut and preen and brag about their wisdom as they purchased multiple houses with idiotic loans it will, in fact, be great fun for me to peer at the stunned look on their dumb faces as they are forced to face up to the hard cruel reality that everybody can’t get rich on real estate.
“‘It brought us over the edge in what we can afford. Two hundred dollars a month is a big difference,’ Hough said
Holy Smokes! I still have are hard time wrapping my brain around just how many thousands of people live this close to the edge. These folks need to down size, not up size.We are a nation that asks, “what’s the monthly payment” and could care less about the total cost.
“I still have are hard time wrapping my brain around just how many thousands of people live this close to the edge”
That’s nothing…quite a few people live *over* the edge (spend more than they bring in). Don’t we (as a country) still have a negative savings rate?
I am amazed at the number of folks who ONLY look at the monthly payment. The car industry is the same. A good car sales person will get the prospective buyer into a “monthly payment” rather than focussing on the cost of the car.
umm… Merrill Lynch seizes Bear Stearns fund assets: report
CHICAGO (Reuters) - Investment bank Merrill Lynch (NYSE:MER - news) has seized $400 million in assets of a troubled hedge fund at Bear Stearns Cos. Inc. (NYSE:BSC - news) and plans to sell them off, The Wall Street Journal reported in its weekend edition.
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The report said Merrill Lynch had seized the assets of the High-Grade Structured Credit Strategies Enhanced Leveraged Fund, despite the sell-off by the fund’s managers of nearly $4 billion in high-quality mortgage bonds to cover losses.
The losses related to subprime mortgages. Bids for the seized assets are scheduled to be negotiated starting at noon EDT on Monday, the report said.
Representatives of Bear Stearns and Merrill Lynch could not be immediately reached for comment.
“Bids for the seized assets are scheduled to be negotiated starting at noon EDT on Monday, the report said.”
Get your popcorn poppers ready!
I’ll be sitting on the beach in San Clemete…
I hope Monday finds a Stern Bear with a butt full of killer bee stings!
“Bids for the seized assets are scheduled to be negotiated starting at noon EDT on Monday, the report said.”
underbids overbids? what’s going to happen on monday that will bring a smile?