It seems the Whitehouse/FED plan is to keep making borrowing for homes cheaper and for shopertainment cheaper. but credit cards still charge 19+% for shopertainment borrowing. banks are tougher now to lend. And with people burned from hearing about joe six-pack underwater, or others scared of buying do to the poor job prospects making buying a home a huge risk is putting them off from buying. buying homes won't help the economy anyhow. The only thing I think they want more homes is so people can shopertain and fill garages with crap they will never use? so why is what the fed has been doing the last 2 years supposed to help the economy?
yes. house is a money's black hole..mortgage %,up keeping,taxes,renovations. the list is endless...but the idea of saving economy this way is fucked up..unless your goal is to have nation of carpenters, roofers and lawn movers..the nation can only prosper thru innovations,not cutting the fucking grass on my lawn..looks like DC having a problem, understanding this..
If PITI is the same as rent, how is a house a black hole? I pay $1100 per month for my mortgage(PITI) and to rent would cost $1350 for the same size place. I definately dont spend $250 per month on upkeep as I cut the lawn and do any repairs myself, but even if I didnt, I cant imagine i would spend $250 per month to make it equal with renting. Not to mention about $300 per month is going towards equity, something that would be lost in rent, so in reality owning for me puts $550 in my pocket every month vs renting, not to mention that rent goes up about 2-4% per year taking more money out of your pocket. I suppose there are some markets where its better to rent, but you cant just generally say owning is a black hole for money.
Unless you are NOT paying property taxes you are always renting. Pay your house off with cash and then stop paying property taxes and see how much you actually OWN your home.....LOL! :eek: You pay for the structure and RENT the land from your local county/city....what a bargin!!!
(Besides the fact that most governemnt officials have mortgages on their homes) the purpose of low rates it to keep people spending. With inflation sky-rocketing and cash saving accounts paying next to nothing, the only option for savers is "investment". With equity investments basically flat in the last 10 years, equity poirtfolio is not looking like it's gonna pay for wealthy retirement either. So, the best option is to spend it all further boosting inflation. Inflation means that "in real terms" not only savings but also salries and wages are going down, further "boosting economy". The best part is a large chunk of "inflation tax" is collected not by the government but by large businesses with lion's share going to banks. The basic idea of the property tax is to pay for the facilities provided by the local authorities that make a house an attractive home: roads in good repair, libraries, perhaps, public transport. However, like with any tax ultimately it just becomes a way to pay for whatever the local authorities want or have to.
I am asking the same question. I want someone from the industry or insight to tell me how this YIELD CURVE even matters for bank. Would a bank underwrite a 30 year for 2% ?! i dont think so. At what point does the treasury curve lose its proxy for 'loans'. How do banks make money BEFORE and AFTER this event?
Ok, let's assume they did something different. What does the economy today look like if in 2008 they slapped on higher margin requirements and bumped the "risk-free" rate to 5%? What does the economy today look like if in 2008 they let all the big financials fail? I am confident it would look a hell of a lot worse today than it does. The expectation here isn't for any kind of meaningful recovery. That's not happening until we find a replacement for the nearly-free oil we've used as a foundation for our society. All we can hope for is something less than an outright crash landing.