Calgarypuck Forums - The Unofficial Calgary Flames Fan Community - View Single Post - What's your forecast for mortgage rates for the next 12 to 18 months? Advice wanted.

macker · 05-07-2009, 11:36 PM

[quote=Tower;1840890]Some of it has to do with the sub prime mortgages in the US coming to a close. It's the last of the wave that helped to create this s* storm the world is currently in.

For some not aware a quick break down (while I am not an expert I have heard this story more than once from men and women in the field)

During the Bill Clinton era a bill was passed basically saying that everyone should have the write to own a home. Because of this the USA Govt announced to banks they would insure the mortgages.
__________________________________________________ ____________

Kind of OT but I'll play

. Clinton was a spark but George W. Bush set a blow torch to things. In 2002 he was pushing for new opportunities for home ownership and this is when the adjustible rate mortgage came out that would give you a low rate for 2 years before adjusting to much higher rates. Lenders were more than happy to sell these adjustible rate "lier loans" where no income was verifyed and you had high school drop outs providing advice on mortgages....The biggest purchase you could make in your life was unregulated. A 1 Trillion industry that was completely unregulated

If you can imagine these mortgages were sold on "stated income" so you could claim whatever income you wanted. The American consumer was back in business and Wallstreet loved it as they could repackage this garbage and sell it around the world as CDO's. In 2004 homeowners used their homes like ATM machines (refinancing) to take out $900 Billion to spend on whatever they could in a most unsustainable manner. In 2004 George W.Bush was bragging that home ownership rates were the highest ever and that new home construction was at the highest level in 20 years and one month after this is when Greenspan came out and encouraged the mortgage industry to come out with new alternatives to encourage more mortgages and this is when Adjustable rate mortgages went through the roof. Greenspan had also been lowering interest rates all the while helping to encourage the irresponsible behavior. It is said that more people ruin themselves in low interest rate environments so this is when people should be the most cautious and ignore some of the so called conventional wisdom as nothing ever stays the same. So it was Bush and not Clinton who watched it all unfold. I blame : 1. Bush 2. Greenspan 3. Wallstreet 4. Rating Agencies (AAA ratings to CDO's) 5. Consumer in that order. It starts at the top and it was poor management and something that should have been avoided.

Greenspan was quoted as saying "It was failure of our best and brightest and the flaws in human nature are such that we can't change them and this will happen again at some point in the future.

So to try to bring this back semi-on topic......The mistakes around us should encourage long term thinking and taking advantage of low rates to lock in long term. Use the low interest rates to your advantage for as long as you can as they won't last forever and it will help offset the huge inflation that we are going to see in the years ahead. I truly believe Greenspan when he says that it will happen again and it will be "the best and brighest" lowering rates to make sure that it does...

http://www.youtube.com/watch?v=kNqQx7sjoS8

05-07-2009, 11:36 PM	#24
macker First Line Centre Join Date: Apr 2007 Exp:	[quote=Tower;1840890]Some of it has to do with the sub prime mortgages in the US coming to a close. It's the last of the wave that helped to create this s* storm the world is currently in. For some not aware a quick break down (while I am not an expert I have heard this story more than once from men and women in the field) During the Bill Clinton era a bill was passed basically saying that everyone should have the write to own a home. Because of this the USA Govt announced to banks they would insure the mortgages. __________________________________________________ ____________ Kind of OT but I'll play. Clinton was a spark but George W. Bush set a blow torch to things. In 2002 he was pushing for new opportunities for home ownership and this is when the adjustible rate mortgage came out that would give you a low rate for 2 years before adjusting to much higher rates. Lenders were more than happy to sell these adjustible rate "lier loans" where no income was verifyed and you had high school drop outs providing advice on mortgages....The biggest purchase you could make in your life was unregulated. A 1 Trillion industry that was completely unregulated If you can imagine these mortgages were sold on "stated income" so you could claim whatever income you wanted. The American consumer was back in business and Wallstreet loved it as they could repackage this garbage and sell it around the world as CDO's. In 2004 homeowners used their homes like ATM machines (refinancing) to take out $900 Billion to spend on whatever they could in a most unsustainable manner. In 2004 George W.Bush was bragging that home ownership rates were the highest ever and that new home construction was at the highest level in 20 years and one month after this is when Greenspan came out and encouraged the mortgage industry to come out with new alternatives to encourage more mortgages and this is when Adjustable rate mortgages went through the roof. Greenspan had also been lowering interest rates all the while helping to encourage the irresponsible behavior. It is said that more people ruin themselves in low interest rate environments so this is when people should be the most cautious and ignore some of the so called conventional wisdom as nothing ever stays the same. So it was Bush and not Clinton who watched it all unfold. I blame : 1. Bush 2. Greenspan 3. Wallstreet 4. Rating Agencies (AAA ratings to CDO's) 5. Consumer in that order. It starts at the top and it was poor management and something that should have been avoided. Greenspan was quoted as saying "It was failure of our best and brightest and the flaws in human nature are such that we can't change them and this will happen again at some point in the future. So to try to bring this back semi-on topic......The mistakes around us should encourage long term thinking and taking advantage of low rates to lock in long term. Use the low interest rates to your advantage for as long as you can as they won't last forever and it will help offset the huge inflation that we are going to see in the years ahead. I truly believe Greenspan when he says that it will happen again and it will be "the best and brighest" lowering rates to make sure that it does... http://www.youtube.com/watch?v=kNqQx7sjoS8 Last edited by macker; 05-07-2009 at 11:47 PM.