Your most recent claim, real estate loans suddenly "have less inherent risk"
Again you fail to read what I write carefully. You have to learn to differentiate between what the writer is commenting on and what the writer might think personally. I did not say I thought RE loans have less risk, I wrote, "while at the same time others have decided that RE lending has less inherent risk". How can you say they haven't decided that RE lending has less risk when they ask for such a low long term rates and at the same time loosen lending standards? Have they decided to lower standards and lower the rate because they think RE has more risk?
If you want to look for a culprit you'd have to look at people, much like yourself, who decided, for whatever reason, to place most of their assets in debt backed securities (money market funds, bond funds, savings accounts, Ginnie Mae funds, etc.) regardless of the return and risk to principle. It was a flight to safety which makes it completely unsafe.
You have also claimed equity extraction has exploded in the last four years because interest rates has steadily declined since 1982.
Please point to the exact passage where I've implied that? You are arguing against your own mis-reading.
You've also claimed that this chart can't be true
Again where did I say that the chart wasn't true? I just argue that it doesn't show the other side of the balance sheet.
you know several other people who haven't borrowed heavily either
No, I said (something to the effect) that most everyone I know, with a few disastrous exceptions, has used the low interest rate environment to pay down expensive debt and move floating rate loans to lower fixed rate loans which has lowered their debt service and increased their cash flow. Why is that so hard to believe? It is what any financial advisor worth their fee would advise individuals to do and it is what I've been advising my clients to do for some time. |
