Will I/O Loans Lead to a D-Day in Real Estate?
On 1/08/06, on Inside Bay Area, was a great article on interest only loans which are extremely popular currently. In fact, interest only loans represent about 35% of all loans on the west coast presently. The main point of the the article was that what happens when these loans adjust and overwhelmingly the answer is "refinance"
The brings up some interesting issues as to what people perceive will happen. Many of those who believe there is a real estate bubble like, Ben Jones Housing Bubble blog, think that a time bomb that may set it off is the adjustments of this interest only loans. Next year approximately $400 billion worth of hybrid ARMS nationwide... by 2007 it could be $1 trillion.
What is scary about reading the comments from Ben's post is the number of people who seem fairly disappointed from the possible reality pointed out in the article. This may cause some problems because of how refinancing of a I/O works, which I will elaborate on tomorrow.
The brings up some interesting issues as to what people perceive will happen. Many of those who believe there is a real estate bubble like, Ben Jones Housing Bubble blog, think that a time bomb that may set it off is the adjustments of this interest only loans. Next year approximately $400 billion worth of hybrid ARMS nationwide... by 2007 it could be $1 trillion.
What is scary about reading the comments from Ben's post is the number of people who seem fairly disappointed from the possible reality pointed out in the article. This may cause some problems because of how refinancing of a I/O works, which I will elaborate on tomorrow.
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