One of the greatest delusions in the world is the hope that the evils in this world are to be cured by legislation.
govt pushing for loan interest rates to fall to 4.5% conventional loan
Fri, 12/05/2008 - 07:23 — JC
It seems that govt is pushing for loan interest rates to fall to 4.5% conventional loan with the help of Freddie and Fannie.
I would be surprised if it halts the price slide though. The appetite for second and third homes is gone for next 10-15 years – no matter what the interest rate -- and all those will take a long time to work through the system. Also, given the uncertainty in economy and current and for sure future job losses most people will wait and watch. In Japan the interest rate was taken to 0%, and still people refused to borrow and the property prices have kept on sliding for last two decades. The funny thing is that US govt. chided Japan for tying productive assets by bailing out the big institutions and now is following the exactly same Japanese prescription – with probably the same end game.
The other funny part is that the very cause of housing crisis, i.e. low interest rates is now being touted to cure the disease. It is like injecting cocaine into person who is dying from prolonged addiction to cocaine.