[lbo-talk] frontiers of financial innovation

Doug Henwood dhenwood at panix.com
Tue Jan 18 16:21:23 PST 2005


Jordan Hayes wrote:


>In particular, it's a no-brainer when appreciation in the market is
>higher than interest rates. Ever take any math classes? :-)

Yeah, I know that. Sane people should not take out variable-rate teaser loans when interest rates are near historic lows and house price/income ratios are at historic highs. I'll bet the people taking them out are not the most sophisticated borrowers around. My sister-in-law's wife recently talked to a mortgage broker who was trying to press all kinds of nonsense on her - when she refused, he said, "How do you think all those people can afford $500,000 houses?" Depends on what your definition of "afford" is.

Doug



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