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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (17968)8/22/2004 9:05:27 AM
From: loantech  Read Replies (1) of 110194
 
< People have been locking in 30-year mortgages where their monthly payments are slashed by 40%. Housing is the No. 1 monthly expense of most people. If your No. 1 expense has now been cut by approximately 40%, on average, that provides a lot of stimulus. >

Most people have not lowered their payment by 40% in fact almost none of them have on a permanent basis. Over time a 20-30% reduction in payment could have been made from a reduction in a fixed rate from 8.50 to 5.75%. So I do not see 40% for most. In addition during the time rates have fallen property values have risen so the accompanying rise in property taxes and home owner insurance has mitigated a large chunk of the savings caused by the rate reduction. In addition most of the lemmings took out larger loans each time they refinanced so instead of their payments falling most borrowers have seen their housing costs increase.

The 40% savings may have been possible but nobody took advantage of it. It is an EMPTY theory in reality.
Tom
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