Home loan rates

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What are home loan rates like where you are at the moment?

Here they are at about 5.6% for floating mortgages and about 6.4% for 2-year fixed. Economists seem to be saying that the floating rates will start increasing towards the end of this year. Whether the fixed rates start rising as well probably depends more on the world economy, especially the European sovereign debt issues.

I need to keep a close eye on all this to figure out when to shift my loan from floating back to fixed.

 

2 years ago I flipped to 5.135 fixed. Not sure today. Here is link for Rockford-IL, it's where I currently live.

 

I rent, because I'm totally priced out of a mortgage.

I could probably afford the monthly payments, but in the UK at the moment you need at least a 10% deposit, usually more like 15%. Who has that kind of waddage just lying around? I'd need to get an additional massive loan just to pay the deposit, in which case I probably couldn't afford the monthly mortgage payments. The housing market is a bubble waiting to burst, to be honest.

I couldn't tell you typical rates, as I haven't looked that far into it.

 

Wow - 30 year fixed rates?! There is no such thing in New Zealand. The very longest fixed terms are 7 years but hardly anyone fixes beyond 2 years. 65% of people here are on floating rates at the moment.

 

When I first moved here 5 years ago, I agreed to a First time Home buyer special rate at 6.25 percent ona 30 yr. Not because I wanted to, but because it allowed me to put no money down. I have since flipped to a 15 year 5.135 rate. But from day 1, we have been throwing alot more than the standard payment at the mortgage and student loans. I willl own my home in a few years. Then I start buying more homes...rentals.... I am handy enough to keep them up. Once I have 6 rentals, I stop working. It becomes slavelord...ahem... I mean landlord time for me.

"WHAT? No rent money? AGAIN? GUARDS! Take these vermin to the Pits of No-Return! Bruhahahahaha!". J.K.

 

I refinanced late last year down to a 4.75% interest rate on a 30 year fixed. We have seen historically low interest rates in the US in the last year or so.

 

Trust me blades of vanatar, you will be amazed how much crap renters can screw stuff up. I have 2 duplexes that I rent out & I spend more time fixing crap then I would have ever thought possible.
Oh, and a word of advice, never, EVER, allow pets. Them little buggers are demons in disguise. I swear cat piss is worse than skunk spray to permanently get out of an apartment.
Until you have had them for at least a few years don't expect to see that much profit from them. I don't think I cleared more than 5-6 grand a year in total for the first dozen yrs or so(mainly because I was paying off the loans early).

 

Two years ago I refinanced to a ten year fixed at 3.875. If all goes according to plan the mortgage will be paid off when teen snook gets out of college.

 

Jeepers. 30 year fixed? 10 year fixed? It's amazing how different things are between different countries. Those sorts of contracts do not exist in NZ. You could never do a 30 year fixed loan here because the break costs if you exited the loan early would be horrendous. Everyone in NZ is on either floating rate or 2 year fixed.

 

Then I imagine that home prices are A LOT cheaper than they are in the US. In my area you're not going to find a home for less than around $250,000 - $300,000.

Unless you're wealthy or have some big inheritence or something, you're not going to be able to pay $300,000 for your home in 2 years, on top of all your other expenses. 30 year loans are pretty much standard. There's risk associated with someone defaulting (as we've all seen in recent years), of course, but there's a lot of money to be made on that interest.

 

I'm thinking I need to move to NZ and open a bank.

 

If so, I'm not sure how adjusting the interest rate lowers the risk of someone exiting a loan early:

A long term loan with an interest rate that adjusts every 2 years creates about as much risk as one that doesn't adjust. It would seem that he's indicating that folks often pay their homes off in 2 years in NZ.

If so, how much is a hobbit hole going for these days? Harbs?

 

Correct. Most people still take 20 years to repay their loans.

75% of people in NZ are on floating rate loans because they are currently cheaper than fixed rates, but could rise at any time. Floating rates are currently around 5.6%

Around 20% will be on 2 year fixed rates. This provides a bit more certainty than a floating rate, but it's more expensive at about 6.5%.

The other 5% will probably be on rates that are fixed for 3 or 5 years, at about 7%.

The reason why people don't fix their rates for longer than 2 years is because if you exit the loan before then (e.g. if you sold your house, or you wanted to move your loan to another bank, or you got an inheritance and wanted to pay the loan off early) then may have to pay a break cost to the bank. The break cost is based on the fact that in order to fix your rate for 2 years, it has had to fix its funding costs for 2 years as well. Usually the two match off, but if your loan vanishes, then the bank might be out of the money, especially if rates have fallen in the meantime. The break-cost is larger the longer there is left on the fixed rate term. So if you broke your loan 2 years in to a 30 year term then the break cost would be enormous.

Therefore there is no such a thing as a 30 year fixed rate mortgage in New Zealand or Australia because nobody would ever take one out.

The fact that such a contract even exists in the USA must be something to do with the way banks offlay their mortgage exposures to places like Fannie Mae etc - institutions which also do not exist in New Zealand or Australia.

 

HB - with a few exceptions where there is an "early payoff penalty", most mortgages in the US do not have associated break-costs for paying them off. I can sell off my house at any point, and so long as I pay the bank the remainder that I owe on my mortgage, the bank won't charge anything extra.

That said, I currently have an adjustable rate on my mortgage. I had a five year fixed-rate at 4.99% when I started, and now it changes annually. However, rates have been so low (presently 5.3%) that I haven't seen the need to refinance (we're moving in the next year or so anyway).

 

Five year rates here are around 5.25%, but you can usually get a 1 point discount. Floating rates are around prime (currently 3%)

When we bought our house in 1995, we took a 5 year term at I think around 8.25%. When it came up for renewal in the fall of 2000, it was a toss-up whether we should get another fixed term or let it float. The forecast was for rates to drop, so we ended up letting it float, with a rate of about ½ a point below prime (7.5% at the time). Rates did indeed drop shortly thereafter, and after 9/11, they plummeted, so we kind of lucked out there (not that I’m happy about 9/11, but given that it happened, at least we were on the right side of the interest rate fence).

 

I was inthe landlord racket in my early twenties as well. Though it was my condo, not a house. I know the game. The key is picking and choosing your renters. I would rather eat a month or two of rent waiting for hte better choice. Long term, the most willing usually are in financial dire straits and will sign anything to get in. Then your stuck and your costs go up. I will hold out for the guy drving the decent car, but not too nice, not the guy who's muffler needs fixing...