Comments from readers of Housing Bubble Blog
“Wells Fargo just raised the interest rate on their jumbo mortgage to 8% this morning. Last week the rate was 6.78%.”
A jumbo is any mortage above $417,000. As an example, let’s say a jumbo mortgage is for $500,000. That jump in interest means $520 a month more in interest payments, with the new total monthly payment being $3300.
“Anyone else get chills when they read the CEO of IndyMac’s letter?â€Â
Indeed, he says even top rated mortgages are no longer being sold in the private market because there are no buyers, calling the current situation “unprecedented.”
So, mortgages will be getting much more expensive (with lots more documentation required), something which will have huge ramifications throughout the economy.
Bush’s “recovery” (such as it was) from the recession was entirely based on the housing boom– a single-industry phenomenon that spilled over into the consumer sector and kept our economy alive. Barring a massive shift in fortunes in other sectors, which I seem to have missed if it happened, without housing driving the economy, we could be in for some rocky times.