The above graph shows national rates for a 3 year adjustable rate / interest only mortgage loan. Exotic loans are looking less hot.
Sunday, August 14, 2005
Monthly Payments on Exotic Loans Rising
Interest rates on exotic loans have been rising recently as short term interest rates continue to rise. Monthly payments are thus also rising.
The above graph shows national rates for a 3 year adjustable rate / interest only mortgage loan. Exotic loans are looking less hot.
The above graph shows national rates for a 3 year adjustable rate / interest only mortgage loan. Exotic loans are looking less hot.
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Great post David. It seems rather obvious that this is what A. Greenspan is trying to achieve with raising rates. He is putting the squeeze on these types of loans, and thus the marginal or speculative buyer. This is not a Goldilocks senario. I would call it the Anoconda senario. Every 6 weeks or so, as FOMC raises rates by 25bps, it becomes harder and harder to breathe.
ReplyDeleteOnly a matter of time before prices start to decline. Could take a year or more, but there's bound to me more of a "slowdown" than the agents would have you believe. Great post.
ReplyDeleteWith this plus minimum credit card payments doubling (and CC interest rates tied to the prime also increasing), a whole lot of people are going to be having significant cash flow problems. Welcome to the wonderful wacky world of the U.S. Bankruptcy Court.
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