Looks like the home mortgage market is going to go pear-shaped AGAIN... From Wolf Street:
Fuel for the Next Mortgage Bust?
For a moment this morning, I thought I was back in 2005 or early 2006, when I listened to a dazzling radio show, hyping cash-out refinancing of your mortgage.
The show was funded by a shadow-bank specializing in mortgage lending. They were promoting their efficient service, that didn’t involve the normal hoops to jump through, and it was a fantastic deal, to not only refinance your mortgage to capture the lower mortgage rates currently available – the lowest since November 2016 – but also to use the home as an ATM once again to cash out the equity that the home had accumulated, due to years of sharp price increases.
That this date of November 2016 keeps popping up is interesting by itself, because on November 10, 2016, according to Freddie Mac data, the average conforming 30-year fixed rate mortgage had an interest rate of about 3.6%, same as now. But six weeks later, December 22, 2016, that average mortgage rate had jumped to 4.3%. That was a jump of three-quarters of a percentage point in just six weeks. Mortgage rates can get very jumpy when the market figures out that they’d been mispriced.
The promo this morning acknowledged this jumpiness and pushed listeners to act now on a cash-out refi at these ultralow mortgage rates, or miss out forever.
Needless to say, there are two issues at play:
#1) - there is much more at the site. Go and read the whole thing if you are thinking about this -and-
#2) - the 'folks' offering you this great deal are blowing smoke up your ass and calling it magic.
In those immortal words: "caveat emptor"
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