Hadlock posted:

So hypothetically if you were buying a house this month, would you choose to rate lock today at 6.25% or wait and see what the fed does tomorrow

Lockback posted:

Rate Lock. I also wouldn't touch any variable interest rate poo poo. Just refinance when we inevitably and rashly crash interest rates again.

Hadlock posted:

In this hypothetical situation due to short term cash flow the loan profile would need to be variable, either a 5/1 or 7/1

Seems like thread consensus is that a refinance in 5 years would yield a lower rate

Hadlock posted:

In this hypothetical situation due to short term cash flow the loan profile would need to be variable, either a 5/1 or 7/1

Seems like thread consensus is that a refinance in 5 years would yield a lower rate

Baddog posted:

It's unlikely that rates are higher in five years than they are now, but gotta evaluate what happens if they are.

House will probably have lost value, you may have trouble refinancing, and the payments are going to go up.

Hadlock posted:

So hypothetically if you were buying a house this month, would you choose to rate lock today at 6.25% or wait and see what the fed does tomorrow

Hadlock posted:

Hypothetically a 5/1 arm is 6.50 and 7/1 is 6.35, whereas 30 year is 6.675, the spread on total monthly payment is about 4.7%

nyt posted:

The universe of commercial real estate includes loans for new construction, mortgages and loans specifically for managing multifamily apartment complexes. The so-called securitized products containing loans that banks make are called commercial mortgage-backed securities — a more than $72 billion market last year. But it’s a different story in 2023, with issuance of those bonds down 78 percent from a year ago.

quote:

The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday, moving forward with its fight against high inflation despite concern that its rate hikes may be fueling instability in the banking system.

Financial markets expected the move, which brings the Fed’s base policy rate to between 4.75 and 5 percent.
The central bank is also facing questions about its regulatory oversight of Silicon Valley Bank, as Washington tries to figure out whether the government could have prevented the turmoil in the banking sector.

“There is risk for the Fed here,” Tim Duy, a Fed expert at the University of Oregon and chief economist at SGH Macro Advisors, wrote in an analyst note. “If the Fed hikes, it must be reasonably confident that regulators have ringfenced the banking problems. If the Fed hikes rates and bank failures multiply, the political fallout will be intense.”

Hadlock posted:

So hypothetically if you were buying a house this month, would you choose to rate lock today at 6.25% or wait and see what the fed does tomorrow

LanceHunter posted:

Federal Reserve raises benchmark rate by 0.25 point despite bank turmoil (non-paywall link)

Borscht posted:

Wait the fed said today that his target for I location is just 2%. That seems incredibly low.

bob dobbs is dead posted:

they should have bought the hedges months ago yes lol

Warmachine posted:

Well, that certainly feels like a bold move given that one of the proximate causes of this crisis seems to be interest rates rising, unless the goal is to state that the Fed is serious and that yes if you're holding onto assets that'll be hosed by interest rates you better sort your poo poo because we're not stopping.

Warmachine posted:

I wouldn't have even increased rates right now, let alone said my true target is 6% if that was the case. Even if half the economy called your bluff, the wheels just fell off the other half of the car as everyone starts scrambling to hedge themselves against your intended rate hikes.

Borscht posted:

Wait the fed said today that his target for I location is just 2%. That seems incredibly low.

quote:

The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee reaffirms its judgment that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. The Committee judges that longer-term inflation expectations that are well anchored at 2 percent foster price stability and moderate long-term interest rates and enhance the Committee's ability to promote maximum employment in the face of significant economic disturbances. In order to anchor longer-term inflation expectations at this level, the Committee seeks to achieve inflation that averages 2 percent over time, and therefore judges that, following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.

Monetary policy actions tend to influence economic activity, employment, and prices with a lag. In setting monetary policy, the Committee seeks over time to mitigate shortfalls of employment from the Committee's assessment of its maximum level and deviations of inflation from its longer-run goal. Moreover, sustainably achieving maximum employment and price stability depends on a stable financial system. Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals.

Lockback posted:

Did you just forget about the inflation problem or...?

LanceHunter posted:

The Fed's inflation target has been 2% for decades. It has low inflation/steady prices as part of its responsibilities, and it hit upon 2% as the official number that meets that definition a while back. It became official policy in 2012.

They also have a helpful guide that shows the difference in their original 2012 statement and the revised edition they put out in 2020.

EDIT:

Here's another interesting read, on the New Zealand inflation-targeting policies in the 1990s that ended up making 2% the defacto "right" amount of inflation in the minds of most economists.

Warmachine posted:

It may not be the job of the Fed to shepherd the banks, but I don't think it's wise to blindly chase inflation targets without consideration for the side effects that is going to have when we're seeing actual bank runs kill off banks.

Lockback posted:

The impact of inflation has, generally, been much worse for the average person than the impact of a couple of banks having problems.

mrmcd posted:

Leperflesh posted:

I tend to agree with the old adage if you only have a hammer, everything starts looking like a nail, and that's a fair criticism of the fed. But also the fed doesn't have to be the only agency fighting inflation caused by supply side restriction, there's the whole rest of the government too. And if the rest of the government can't act, the fed's actual responsibility is to force the economy into a recession rather than let it run away into hyperinflation and have the actual US, and therefore global, economy, actually Fail with a capital F as in money no longer has value and every sovereign nation is bankrupt.

I like to think about shortages during the major world wars. Governments met severe shortages of essential goods with radical action: rationing. After major natural disasters, there are laws that are supposed to stop price gouging. When entire industries essential to the US economy are failing, the government bails them out: see the auto industry, the airline industry, the banking industry, multiple times.

The government has tools, if it cares to use them, we don't have to rely on the fed to fix everything. And in the last three years, it has been happy to bail out businesses with massive cash giveaways and loans, and it's even helped individuals by suspending evictions, mailing checks, extending unemployment, poo poo like that. I don't think I "blame" the fed for doing what it's designed to do while the conditions it's supposed to react to continue to prevail.

mrmcd posted:

I guess my problem with what the Fed is doing is that they have one tool in their tool box (legally) and it's not the tool that's needed. Inflation is fundamentally about too much money chasing too few goods, and people often assume it's the "too much money" part that's the problem. That's the image burned in everyone's mind about Zimbabwean 100 Trillion Dollar bills or 1930s Germany or whatever. But there's a whole second half of that sentence, and the American economy is clearly suffering from a too few goods problem. COVID completely hosed up so much stuff in the economy. Supply chains and ports, were widely reported, but also more subtle stuff. Things like 500k-800k workers being missing because they're dead. Two years of economic demand being suppressed and then all wanting to catch-up at once. Industries that built their whole business plan around easy access to cheap immigrant labor running into the twin barrels of Trumpism and COVID. Everyone wanting to move to the countryside one year, then back to the cities the next. The complete inability of any American city to build affordable housing in any meaningful amounts.

Except the Fed can't do jack poo poo about any of that. They can't fix the ports, they can't fix immigration policy, they can't resurrect dead workers or force boomers back into the workforce. They can't make nimbys stfu and build multistory apartment buildings near transit hubs. They can't help the several taiwanese companies that make all the computer chips for every new car unfuck their supply chain and protect them from China. The people who can do anything about that are more interested in holding hearings about imaginary conspiracies of trans people that want to steal their children and make the Twitter mods be mean to them.

JPow has one tool, making money cheaper or more expensive. He's a man who only has a hammer and by god he's going to swing that hammer at the face of American workers until enough of them don't have jobs and they'll stop wanting to buy things.

quote:

https://www.bnnbloomberg.ca/canada-needs-300-000-new-rental-units-to-avoid-gap-quadrupling-by-2026-report-1.1898927

In order to reach the optimal vacancy rate of three per cent, the report suggested Canada would need to add 332,000 rental units over the next three years, which would mark an annual increase of 20 per cent compared with the 70,000 units built last year.

The research analyzed vacancy rate data released in January by the Canada Mortgage and Housing Corporation (CMHC).

Canada's vacancy rate fell to 1.9 per cent in 2022, its lowest point in 21 years, from 3.4 per cent in 2020 and 2021.

Competition for units also drove the highest annual increase in rent growth on record, by 5.6 per cent for a two-bedroom unit.

Canada’s rental housing stock grew by 2.4 per cent in 2022, led by Calgary at 7.4 per cent and Ottawa-Gatineau at 5.5 per cent, while Toronto and Montreal saw the smallest percentage increases at 2.1 per cent and 1.4 per cent, respectively.

"We haven't seen that many additions to the purpose-built inventory in almost a decade, so you would think that added supply of units would ease some of the competition, but what the CMHC rental market data revealed to us was that it didn't," said RBC economist Rachel Battaglia.

Slow growth in Canada's two most populous cities has been outpaced by rapidly increasing demand, partly fuelled by high immigration levels, she said. Annual federal immigration targets are set to grow eight per cent by 2025, meaning demand is unlikely to let up.

...

mrmcd posted:

Things like 500k-800k workers being missing because they're dead.

Bio-Hazard posted:

Those dead COVID workers were fat, old and disabled. They were not productive workers.

And losing "500-800k" workers certainly didn't affect the historically low unemployment rate.

Reread your post and eat more brain pills, they are good for you

Leperflesh posted:

Regardless, in addition to covid deaths there's a far larger number of people who have or had long-term health effects from lingering covid that didn't die and many of them have had to leave the workforce. This does not get much press.

And when you remove people from the workforce, unemployment goes down. Fewer workers for the same number of jobs does that. That's how that works.

e. people on long-term disability aren't counted as "unemployed" fyi