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Strategies & Market Trends : Galapagos Islands
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To: Augustus Gloop who wrote (45523)7/31/2003 5:08:49 PM
From: Original Mad Dog  Read Replies (2) of 57110
 
One of the key things that has kept the economy going is the refinancing boom and the low consumer interest rates generally. That, IMO, has run its course.... I locked in a rate of 4.25% in June (7 year ARM no points or costs) and the lender is doing everything it can to delay and ask for more documentation because the rates have risen so sharply since then.

I think everybody who didn't already get on the gravy train may find that it has now left the station in terms of dirt cheap loans. That means that something else needs to take over as a driver of economic growth. The good part of the equation is that so many people have gotten their mortgage rate below 6 or even 5 percent on a fixed basis or long term ARM that the rates won't pop back up for them for a long time (unless they move). That benefit could help sustain a pretty good consumer spending pattern for a long time to come. The tax cut on top of that will also help while it lasts. I have to believe that some of that money will be finding its way into the market, simply because there isn't anyplace else to put it.

I can't tell you how many people I know whose mortgage payments are so much lower that they are talking about paying for their entire house in ten years or less. I never heard anybody mention doing that five years ago.
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