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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (24904)1/19/2005 9:06:39 AM
From: Ramsey Su  Read Replies (1) of 110194
 
Let us do a simple comparison.

Assume we are back in 1989. Real estate was booming, no end in sight. As it turned out, it was the top and real estate prices did not do much for the next 3-5 years.

Now look at 2004. We may not see any real estate appreciation for 3-5 years. The difference between 1989 and 2004 would be the amount of AMRs coming out of the fixed period within 3-5 years.

What if all the AMRs were taken out around 4%. A max jump of 2% would take them to 6%. While 6% in itself does not sound all that bad, it is a 50% jump for those used to paying at 4%, especially if they were of the IO variety.

It could be one ugly scenario.
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