Reset Shock MitigationSadly, I have been dragged into the Fed Funds drop next month camp. The Fed needs to give everyone, borrowers, lenders more time to swap out of adjustable products as resets peak. Rate shock on the patient might prove fatal so the Fed is lowering the voltage. This won't help WaMu with the deal they made with me for a prime +0% HELOC however and it surely won't goose new business because the banks are not going to pass the drop through to new loans.
This is yet another unintended consequence of the nation being placed under house arrest. The velocity of the housing market isn't just slowing, it is crashing. Sure much of the activity 2001-2005 was unsustainable but now we are in a period of significant overshoot to the downside. Lately we've seen "right priced" houses selling quickly but that was a phenomena a mile wide and an inch deep. Next up is a time where even low prices are going to require 6 months or more to close.
My latest wacky idea is when the time comes to buy more investment properties I'll offer to put $10,000 per $100,000 borrowed into a long term deposit with the same bank effectively self financing at a 10x leverage.