Tag: mortgages

Jumbos still cheaper than conforming mortgages

Jumbos still cheaper than conforming mortgages

For years mortgage rates on “jumbo” loans have been higher than for traditional (conforming) mortgages. Since jumbo loans were larger than the upper limit permitted to be packaged and sold to Fannie and Freddie, banks would typically charge a premium for “illiquidity” on these products. But starting last year conforming mortgages became more expensive for borrowers than jumbo loans.

On the Canadian housing market

On the Canadian housing market

Fitch, the ratings agency, has reversed itself on Canada. It now believes that the housing market there is poised for only modest declines at worst. Previously, Fitch had said that Canada’s housing market was well overpriced and that a major correction was a serious risk. I believe the combination of high prices and high household debt means the risk of a major correction is still there.

Housing bubbles in Sweden and Germany and the over-reliance on monetary policy

Housing bubbles in Sweden and Germany and the over-reliance on monetary policy

The central banks in Sweden and Germany are concerned about overheating economies as the European sovereign debt crisis has led to a net inflow of investment into their housing sectors. If one looks at European economic policy, these bubbles are the natural outgrowth of a continued over-reliance on monetary policy in economic orthodoxy. More bubbles will follow.