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-- -- our next guest says.
Don't panic yet.
If you have good credit you still can't get a line Greg McBride is Bankrate dot com senior financial analyst he's joining me with more Greg let's first talk about.
Could we keep talking about the credit squeeze that many companies are feeling certainly strains between bank.
Lending but just tell me about mortgages.
Can you get a mortgage isn't getting tighter by the day.
The credit is still available but here's what's changed just even in the last couple of weeks we've seen wider mortgage credit spreads.
The difference between mortgage rates and benchmark treasury yields although that had narrowed after the takeover of Fannie Mae and Freddie Mac.
We're starting to see gap widened out again a reflection of the nervousness in the credit market.
And still -- Jumbo mortgage rates are still in the stratosphere.
At thirty year fixed Jumbo mortgage is now about seven point 8%.
Don't you find that stunning that the government has back all debt by Fannie Mae and Freddie Mac after seizing those two.
Agencies and you still see mortgage rates going up.
And I think that's really just a reflection of the fact that there are still a lot of bad loans out there nobody knows exactly how many also think the takeover of Fannie and Freddie there's there's a sunset on that nobody really knows what the -- going to be like beyond 2009.
You put all that together investors are very risk averse and that's -- leading to a higher risk premium on mortgage rates relative to treasuries.
Right now that spread is about 260 basis points in off until a year ago the enormous about a 160 basis points.
-- did not want to get too arcane but lot more than a bank of London Interbank offered rate you've seen it a job that three -- up again today.
People should pay attention to that -- adjustable rate mortgages right -- Their rates are going to go higher tax.
-- -- -- Here's where that's gonna -- for that's going to be felt it's those resets that are scheduled if you have a more adjustable rate mortgage peg to Libor.
And you're scheduled to see your -- November 1 or December 1 hold onto your hat because that higher -- Libor.
Means your payment could go up a 150 bucks a month 200 bucks a month relative to what you had seen say earlier in the year or twelve months ago.
What about credit cards because again and a lot of institutions.
Credit card receivables.
-- credit getting tighter of people credit card limits getting cut here can you get a new credit card.
Well these developments have unfolded over the last year and a half not the last week and a half yes -- card issuers are still very risk -- they're definitely play defense right now so as a consumer.
Keep an eye on those credit limits because yes this credit limits -- be scaled back also the pie is being sliced thinner in terms of who gets the best rates -- If you have very good credit.
And the rates are significantly lower than they were a year ago because of all those fed rate cuts a year ago we were looking at variable rates about 14% on credit cards.
Today it's about eleven point 3% that you need -- credit score of at least 700.
Well what about home equity lines -- credit -- banks and lenders.
Just send -- out blanket letters to everybody across this country say and -- home prices are falling.
Airlines being cut in that.
Not everybody -- -- yes there's been a lot of that happening a lot of that is really made from the 35000 foot view it's it's not made at the homeowner level solid mean if you get one of those letters.
And realize it's a by product of falling home prices and rising foreclosures it's not necessarily a reflection of -- if you're in the midst of -- home improvement.
Or need debt for college tuition get on the horn contact the lender appeal that decision if that doesn't work.
Look to refinance -- another wonder because not everybody is being an equally draconian.
Quickly should you.
Brought down if you have a bill coming -- like that put it in say.
-- the bank.
This so it set aside I'm not a big fan of that.
I just I'm not a big fan of that I mean look this is a time not to be relying on borrowed money this is a time does too.
Now put into the habit of saving and living off of that savings rather than relying -- borrowed money.
-- Greg hey man Greg McBride Bankrate dot com thank you so much for being here right to say it.
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