It is totally beyond me why anyone would take adjustable rates in this LOW rate environment.
This is a great article on the state of interest rates, housing values and the economy:
Debt Bubble Stretches to Breaking Point
"At Washington Mutual adjustable-rate mortgages accounted for 53% of all new mortgages in the first quarter of 2004, up from 27% in the first quarter of 2003."
and
"Countrywide Financial funded $15.7 billion in adjustable-rate mortgages in April 2004, up 130% from a year ago."
What?????
I wouldn't even consider buying anything in the overpriced metropolitan areas. Nobody should buy there with the intent on selling or refinancing in the next few (10+?)years. There's a really good chance that values will decline and sales won't be happening, refis will be declined and rates will be much higher.
Why does anyone think that rates will go down?
"Fed Chairman Alan Greenspan told the Credit Union National Association in a February speech that rising mortgage debt, up to $6.8 trillion at the end of 2003, wasn't a problem because lower interest rates had reduced the amount that consumers had to pay each month to service those mortgages. Greenspan didn't say what would happen to both borrowers and lenders when higher interest rates raised the monthly payments on those mortgages."
Take a wild guess what will happen ....
"General Motors used to be a car company. In 2003, the company's finance division, General Motors Acceptance Corp. (or GMAC), reported profits of $2.8 billion. General Motors' car business showed profits of just $1.1 billion. The finance division accounted for 71% of the "car" company's profits. Profits at GMAC grew by 65% from 2001 to 2003."
I had no idea.
"These three rules for bubbles don't pinpoint when the bubble will burst. And my examples hardly create a complete list of all the problems that lie in wait for the economy and the markets as we work through Mr. Greenspan's latest financial bubble."
A huge bubble is all that's left of America - it is financially and morally bankrupt. There is nothing of value, it's all smoke and mirrors. Well, the scenery is great, but tourism is way down too due the American arrogance.
I know foreigners in Florida so sick of America they sold their real estate and they relocated to other countries. Unlike American, they don't walk out with their 3% down payment, they take it all because they paid CASH for their houses. Yup, all the way up to multi million dollar mansions - paid for with cash.
A German woman had overstayed her visa last years for a few days because her dog was sick and eventually was put to sleep. She was arrested when she arrived at the airport to reenter the US and she was refused a phone call to the German embassy or to her husband (a wealthy business man)or anyone else. After some interrogation, she was handcuffed and escorted back on the plane that she had arrived on.
The dollar may be cheap, but a lot of people are just so sick of being harassed by Americans. Florida started to refuse to issue or renew drivers licenses to snowbirds from other countries.
These are the people who do nothing but bring their money to the US and SPEND it on green fees, restaurants, bars, real estate ....
How can America be so stupid and alienate these people?
Millions of American retirees are looking to relocate to Mexico and Central America, and of course I am too. Can't wait to get out of here.
Posted by Christine at June 2, 2004 05:36 PM | TrackBack