0 Housing Bubble: New NOW in Color

Great set of charts from Visualizing Economics, showing the 2000-06 period, the 2007-11 collapse, and the c0ombination of the two.

My one beef is with the phrase Housing Bubble. As the charts show, the bubble was very specifically limited to a handful of regions. Nationally, we had a Housing boom & bust — but the “bubble” was in Credit. This was thanks to Greenspan’s ultra-low rates, the abdication of lending standards, that  were driven by the demand to feed the Wall Street securitization machine.

Anyhow, here is what the price changes look like mapped out:

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click for larger map

Detail: Housing Bubble: New NOW in Color

0 Financial Crisis Has Hit Main Street

Jumbo Mortgage rates moved up sharply over the past week as the credit markets ground to a halt. Borrowers with good credit and a 20% down payment today could qualify for a 30-year fixed-rate mortgage at 7.625% with a one-point fee. That's up from 7.25% on Friday of last week.The rate has been trending upward from 7% since the financial meltdown gained full speed in the last few weeks. Investors are pricing in the increased default risk and the national decline in home prices. No area is immune as noted by the latest Case-Shiller numbers. The move by the US government to pass the mother of all bailouts has been awaited anxiously by the entire credit industry. If you can't save housing you can't save the financial system nor the economy from a financial meltdown/great depression scenario.

However, the worst development is adjustable rates have dramatically increased. Bloomberg reports that the international rate banks charge each other for one year loans, known as the London Interbank Offered Rate or LIBOR, moved LIBOR rates to 4.08% as markets were locked up with the meltdown in credit markets. LIBOR was in the mid to low 3% range throughout the summer. If we move to LIBOR rates of 5% range that would push ARMs to about 8%. The meltdown of household names is the best opportunity for people to refinance or purchase as investors want something safe/secure. Nothing is safer in this market than solid credit client's looking for a phenomenal jumbo mortgage rate. Now is the time to refinance as rates are likely to get worse over the next two years and guidelines to get more restrictive. The best rates in a generation are behind us as banks recapitalize and governments work to save a financial system on the edge of complete panic.

About 6 million U.S. mortgages, including almost all subprime home loans and 41 percent of prime ARMs, are linked to LIBOR, according to First American CoreLogic, Bloomberg reported.

Detail: Financial Crisis Has Hit Main Street