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Non-Tech : Deflation
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To: JF Quinnelly who wrote (263)4/21/2004 3:47:10 AM
From: Maurice Winn  Read Replies (1) of 621
 
He can do 0.25% steps up and see how they go. Rates for mortgages have already risen a bit. My sister-in-law bought a house about a year ago with not a lot down but has a fixed 30 year mortgage at something under 6%.

The cost was higher than a variable mortgage but 30 years is a long time [I think it was 30 years]. I wouldn't want to be the lender! That's not much of a return in my book.

If the first 0.25% doesn't break the bank or the borrowers, then he can just go on squeezing up every few months until there is some squealing. He can maintain loud squealing, but avoid shrieking and leaping off parapets.

I don't think he'll move rates up as fast as he brought them down. Down usually happens a lot faster than up. Gravity, panic, overload and other natural forces often result in very rapid, unimpeded collapse. It was very impressive that we got away with the Y2K bust without any dramatic, self-sustaining collapse [other than a market clearing, margin adjusting reordering].

Mqurice
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