Mortgage

Real Estate and Interest Rates – Prices Go Down Either Way | Jabar Post Indonesia

Real Estate and Interest Rates – Prices Go Down Either Way | Jabar Post Indonesia/a> – This time JabarPost.Net will discuss about Mortgage.

The following is Real Estate and Interest Rates – Prices Go Down Either Way. And for those of you who want to find a similar explanation, you can search in the Mortgage category

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Real Estate and Interest Rates – Prices Go Down Either Way | Jabar Post Indonesia

A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession”) to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.[1] A mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan)”.

Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.

In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called “securitization”, which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.



In my last video I talked about interest rates…..and there seems to be some confusion. In this video I clear up any confusion about what I was saying, and I explain why I don’t care about real estate prices at this point.

Here is where I got that interest rate chart from: https://youtu.be/xlkouwshxYQ

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28 Comments

  1. Daniel, watch how $SPY will drop down to $180.00 then buy Real estate and Hold till July 2021 and real Crash will occure in all Western World. Capitalism is going to be replaced as Economical system.

  2. The UK military forces have a famous quote for women. If you can't prevent sexual assault, just relax and try to get maximum pleasure.
    Same here, If you can't prevent rates from dropping, try to pretend its not bullish:D

  3. So if they don’t shoot up in near future, should it bother us? In the long run we all are dead. People do waste approx. $2000 every month on rent. So even of price fall by 25000 each year, we did not save anthing

  4. Exactly. The past 4 months or so the banks have cleared up the "Pent up demand" which was there but finite. And w once it's cleared out, we're ready for the next leg down in the market. This process repeats continually as prices drop, until there's nothing left and everyone throws in the towel. Then and only then are we ready for a true recovery.

  5. Not sure. At this point it's the cost of a mortgage vs renting more than anything. Could be Nations of renters…hedge funds and big money piling into homes and then renting them out. It's all due to low rates so I don't think the FED lets rates rise and blows up the "financialization of everything" bubble. Only way we see rates rise is if the market demands higher rates, and they're not, because for whatever reason they believe inflation is 2%.

  6. There will be buyers if buyers can save enough $ toward down payment. Banks are starting or has been making bad loans to unqualified buyers. Cracks are repeating itself like in 2008/2009.

  7. The interesting yet alarming scenario is that Real Estate valuations will continue to fall over the coming 5 years, yet interest rates may find themselves climbing in a non-correlated market…. The result doesn’t take a genius to know the outcome!

  8. very thought provoking danny
    btw I,m pretty sure u realized my spotlighting of you regarding which calender you,d be using was just tom foolery on my part, which often happens when I,m sleep deprived and in front of a keyboard.
    good work as always. cheers
    p.s. how many languages can u speak?

  9. I couldn't agree more, Daniel. The recent so-called LEAP in sales here in the GVRD (off a very low Sept. 2018 base) drew in 46% more y/y buyers in September, 2019 due to lower prices. Sales didn't increase by 100%+ quite simply because, prices are still wildly-inflated and therefore, we can expect to see continued price declines which will be necessary to encourage the next cohort of "willing/able" buyers at those lower price points.

    All that happened in September was that a few more passengers were added to the top deck of a sinking ship. Interest rates have lost their stimulative effect as far as increased pricing is concerned.

    As per usual, this video has been posted to the Metro Vancouver Housing Collapse Facebook forum! Thanks again!

  10. No Daniel they will go up soon, this year even ,1.5 point atleast id not beginning of 2020 at the latest indifferen the outcome of the elections. Why? The air is out of the market. Meaning lower than 1.5 rate now hasnt pumped up consumor spending, rdal este home buying, nor investing. Especiallly new cars, trucks, motorcycles real estate capital good including hiring of employees. Bdsides due to 'cheap ' money and bubbles, household goods they got it all new and bought with lot of debt year after year new, and real estate cars etc most cant afford to buy with thsee inflated prices new 'again' with the help of loans. Pension funds / institutional investors banks need higher rates. Saving, capital go abroad now. Capital also non real estate investing related flees our Canadian shores, not the otherway arround as they from Canada (con)federal gov. try to convice us!
    Besides again; very low interest rates only drive (realestate) prices up, causes (monetary if you dont watch out and) price inflation and accelerate our house hold and financial and insurance and institutional investors like pension funds – goverment or private sector owned – debt spiral. Low interest rates / Keynes fullfiled its purpose, but now only works destructively.

  11. Disagree that cutting rates from a low level doesn't do much. Look what a small rate decrease does to long term bond prices – it sends them skyrocketing. It has a similar effect on low volatility and growth stocks by cutting the discount rate which has a huge impact on the present value of the companies over the long term. Real estate is also a long term asset class so the effects should be similar. I think this whole idea that central banks don't have much ammo when interest rates are already low is a fallacy.

  12. Similar things are happening here in N.Z. I suspect a long period of stagflation is coming where consumers withhold spending in anticipation of cheaper prices in the future, and not just with housing. Economists hate it, but I suspect it is necessary to weed out the production of items that are currently only sold as we currently live in an era of brainless consumerism. Items of genuine value will still sell due to the eventual opportunity cost in time of forever delaying the purchase.

  13. patience is the key to investing in the stock markets and specifically with real state…its going to be an ugly, ugly 15, 20 years just as we have seen house prices climb for the last 15 years…we are going to see a decline over the next 10, 20 years…prices in Canada are out of whack, crazy, sit back, relax, they will come down big time…and this will change quickly if interest rates start to rise..bring on the slow grind, possibly crash…it will be fun to watch from the sidelines

  14. As I see it….Smart people aren’t buying anymore, there’s a glut of housing in Toronto. Yes….Real estate prices are slightly ahead of this time last year’s prices, however it’s only because condo owners are trading up. To get out from higher maintenance fees and the glut of new units coming into the market. Foreign buyers aren’t coming with fresh stacks like they once where, there being circumspect. China has restriction on monies being transferred. These higher prices can only be sustained in an inflation environment. To much money cashing to few goods. However there’s plenty of houses except there just not affordable. Go figure?….Remember….Cheep money bowered with lower interest rates can’t last forever. It’s detrimental to other financial vehicles like insurance companies and pension funds. So I’m thinking it’s unlikely BOC will reduce rates into negative territory. I’m thinking we’re going to start to seeing a stagflation or a deflation coming. Where, not enough money due to current rates being hard enough to service chasing to many goods or housing that oldsters will soon be selling because they need money. Remember many have no financial income other than a house to help support their golden years or unexpected need for nursing homes and the likes. Any slow down in economic growth or a serious slow down in economy means interest rates aren’t going anywhere or neither is higher prices on over priced particle board mansions. Never mind the shanty semi’s in T.O where the streets are littered with cars parked up and down every side street. You’re charts are a good indicator on future predictions, but this government has allowed the affordability to get out of hand with lower interest rates. So..It’s not going to get fixed without a major blow to the people bowering to purchase these price digs.

  15. @FORMAFIST There is another reason interest rates have less effect near zero. Denmark and Sweden have reached the point where the main factor regarding mortgage servicability is whether you can pay the principal over the term of the loan. The interest component is almost negligible. The equation is simple and linear: loan amount divided by years of the loan = amount you pay per year. In Denmark they saturated the market at that point about 3 years ago, and house prices havnt really moved much since then. People simply can't pay higher prices until they are paid more. So only wage inflation will drive higher prices.

  16. The very long ebb and flow of interest rates has everything do with Humans and greed across the "established roles" of several generations. Great grandpa does well via hard work and prudent investment. Grandpa wants to do even better, but without the hard work, so he rewrites the financial rules to cheat. Dad, due to the resulting asset bubbles, also benefits handsomely from the rewritten rules to the point of absurdity. Then the bubble pops and Junior not only doesn't get to get in on the action, but he also has to pay for all the "broken dishes" from the lavish parties of yesteryear. So Junior, after much pain, re-writes the rules back to where they made sense and were fair. Junior's kids, who grew up with jack S*** and have no idea what went on in the past, pull themselves up out of poverty and effectively re-start the cycle. It also has a lot to do with Governments wanting to over-spend but NOT wanting to raise taxes accordingly…but I don't think they are wholly separate things.

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