[lbo-talk] Re: frontiers of financial innovation

[Tim Francis-Wright]

I'm sure that Jordan is right, in that many homeowners have benefitted 
over the past few years by opting for adjustable-rate mortgages, even 
ones with negative amortization.  On the other hand, I'm glad that I'm 
paying 4.50% fixed right now.

Floating-rate mortgages, pace Alan Greenspan, seem more of a gamble than 
usual.  The Treasury yield curve is flattening (and most floating rate 
products rely on the short-term side of the yield curve), plus rising 
interest rates will tend to put a brake on housing prices.   And that's 
not even taking into account the effect on housing prices of eliminating 
the mortgage interest deduction.

--tim francis-wright