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The Langers Forum
Economics Nerd Central/ The Global Inflation Thread
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<blockquote data-quote="How bad boy" data-source="post: 7108847" data-attributes="member: 3028"><p>That's a little too Efficient Market Hypothesis for my liking, i also think interest rates are very heavily priced based on market pricing, far more than future expectations, primarily due to market competition. </p><p></p><p>You only need one or two competitors in the market who are more bearish on the market to drag the charged rates down, and a mortgage sales manager who can't offer market competitive rates isn't going to be selling many mortgages. I wrapped up my remortgage for 5 years at 1.59% slightly before the start of this thread. </p><p></p><p>IMO, it was a pretty risky bet on behalf of my mortgage provider, unless they can offload the risk (almost dead certainty) of losing substantial amounts of money on that deal in real terms over the next 5 years. </p><p></p><p>I honestly haven't been paying attention to what's happening on CDOs, but i presume that's how banks are planning on not going bust (again). </p><p></p><p>"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing" </p><p>Citigroup CEO Chuck Prince, 2007</p><p></p><p>I don't think mortgage interest rates are as forward looking as you claim</p></blockquote><p></p>
[QUOTE="How bad boy, post: 7108847, member: 3028"] That's a little too Efficient Market Hypothesis for my liking, i also think interest rates are very heavily priced based on market pricing, far more than future expectations, primarily due to market competition. You only need one or two competitors in the market who are more bearish on the market to drag the charged rates down, and a mortgage sales manager who can't offer market competitive rates isn't going to be selling many mortgages. I wrapped up my remortgage for 5 years at 1.59% slightly before the start of this thread. IMO, it was a pretty risky bet on behalf of my mortgage provider, unless they can offload the risk (almost dead certainty) of losing substantial amounts of money on that deal in real terms over the next 5 years. I honestly haven't been paying attention to what's happening on CDOs, but i presume that's how banks are planning on not going bust (again). "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing" Citigroup CEO Chuck Prince, 2007 I don't think mortgage interest rates are as forward looking as you claim [/QUOTE]
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