interest rates in 5 years - Garth Turners predictions

[bigbabba]

QUOTE (Mike56 @ Apr 4 2009, 07:41 PM) I would say that Garth Turner is way out of line with his estimate. The main factor that will drive interest rates will be the price paid for US securities. Now US securities can not afford to rise by more than two to three percent over the next three years as the US debt will not be reduced by the amount required to allow for US rates to climb any higher than this. Rates cannot move higher until they can reduce the amount of debt in the US to a level they can afford. In addition the quickest way for the world economy to crash and burn would be through high interest rates globally. Something else to think about, this year in the US over 25% of the mortgages are being refinanced as the result of lower rates and to allow people to hold on to their homes. If Garth is correct with his assumption, just think about all of these people renewing their mortgages when rates are over 10%. It will be welcome back to 2009. The leaders of the countries can be stupid at times but I don`t think they are that stupid.

Mike


I guess you missed the article in the G&B less then 2 weeks ago, there is 25k mortgages in Canada that the banks dont want to renew due to people owing more on the house then the it`s worth.

 

[Mike56]

Big Babba,

Do you think the banks want to own these 25000 homes. I can tell you it a close community in the banking world with the big 5 and there is a lot of presure from Ottawa on lending. This is similiar to a number of situations that occurred in the US and what they did for the people that were still making their payments is they refinanced so they didn`t own more empty houses that cost a lot to maintain when empty. The key is the people are still making their payments.

Mike

 

[Thomas Beyer]

QUOTE (bigbabba @ Apr 6 2009, 04:39 PM) Interest rates can very easily hit 11%. They hit 18% or so back in the late 80s. What`s so hard to believe? Many people believe that we are in a rougher situation now then we were back then..the only thing to put us over unanimously would be the interest rate..I agree with Turner, it`s coming..how much? Who known’s but, anything is possible.
of course anything is possible .. the question: how likely is it ?

The reason why interest rates were so high in the early 80`s was a very rampant economic growth (baby boomers fueled) and very high inflation.

 

[PeterKinchMortgageTeam]

QUOTE (bigbabba @ Apr 6 2009, 03:47 PM) I guess you missed the article in the G&B less then 2 weeks ago, there is 25k mortgages in Canada that the banks dont want to renew due to people owing more on the house then the it`s worth.

I suspect that most of those are with the Alternative or subprime lenders that are no longer lending - and therefore are not interested in the renewal business. I have yet to encounter any situations with chartered lenders not renewing mortgages in situations where clients are current in their payments.

The banks after all are in the business of making money - given the option of renewing a current loan and continuing to make money, vs pulling the loan and owning the home - its far more likely that they will just renew.

 

[Mike56]

Peter,

You are correct in your statements and the government presure in this area is extreme.

Mike