Remember, Uncle Al KBE's job was to run a currency system, not help house buyers get capital gains on low interest long term loans which would reduce the responsiveness of any interest rate changes the fed might make.
<Greenspan shouldn't recommend people to do ARM financing. Rates have been going up since then. >
At the time, I wondered "What the heck?" then realized it wasn't his job to give benefit to house buyers compared with the mortgagees.
He was wanting a flexible, responsive currency. And, in fact, adjustable rate mortgages were lower and should, overall, in the long run, be lower, as the lenders don't have to build in a safety factor for their long term loans.
So, he wasn't really defrauding them.
But my advice would have been to go with the fixed, low, 30 year mortgage. Suffer the risk penalty, because in the long-run, the USD will go to zero as a dilution-free, politically stable cybercurrency, the Qi, takes over.
But 30 years is a longgggg time and a lot of people would be selling their houses and repaying their mortgages within 5 years or 10 years, so an ARM might well have been the best way to go.
Mqurice |
