The potential for higher mortgage rates and mounting foreclosures suggests the overall recovery is ” still very fragile,” he said.
” If you raise mortgage rates by three-quarters of one percent,” the amount by which Ranieri said the Fed’s buying, set to end Dec. 31, has reduced them, ” it’s going to have some dampening effect,” he said.
” While we’re through most of the subprime issue, we’re just in the middle of, or through a little bit less than half of, Alt-A, and the economy is now starting to take a toll on prime, which is the biggest portion, and the jumbo-prime area is a disaster,” Ranieri said.
Anyone know anything about the expiration of the Fed’s buying program? An interest rate increase of three-quarters of a point would be significant increase from our current extremely low interest rates.
My take on the $8,000 first time home buyer tax credit is that Congress will extend it. The program is popular and Congress isn’t. They can add.
The problem with the $8,000 program is when it ends, we’ll see a withdrawal effect. The program cannibalizes future sales to first time home buyers, so those sales could really drag for a while after the program ends.