06 December 2008

I Think that Someone is Stuck in a Do Loop

Because it looks like Treasury's latest plan is to lower mortgage rates to 4.5% for new home buyers, to stop the slide in home prices.

First, you can't re-inflate the bubble...The speculative frenzy that was at its core is over.

Second, why would someone buy a house at 4.5%, when whoever you sell the house to 20 or 30 years later would buy at a more normal rate, driving the price down.

Basically, it's an attempt to get people to knowingly buy overpriced homes.

Does it come with a kick me sign for buyers to wear on their back?

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