Deflationary environment would lower mortgage rates
You’ve probably never heard of Nouriel Roubini but you may want to start paying attention. Along with Peter Schiff he basically called the subprime mortgage crisis before the term even existed. He is getting a lot of attention lately in the media.
In this article published on Forbes.com he lays down the argument that the US economy will experience deflation in the next 6 months. Although there are many scary macro-economic implications of such an event there is a silver lining for mortgage rates.
Since we know that higher inflation causes mortgage rates to increase, it can also be said that deflation causes mortgage rates to decrease. In fact, much of the credit for low interest rates following 9/11 has been appointed to concerns of deflation.
Posted: November 2nd, 2008 under Economics & Interest Rates.
Tags: deflation, mortgage rates, Nouriel Roubini
Comments
Pingback from My Mind on Mortgages » Deflation post #4
Time November 17, 2008 at 9:31 am
[...] originally discussed deflation and the impact it should have in lowering mortgage rates in this post back on November 2nd. We would expect mortgage rates to decrease as deflation becomes [...]
Pingback from My Mind on Mortgages » Deflation string-article #2
Time November 7, 2008 at 9:02 am
[...] past Sunday I blogged about Nouriel Roubini’s prediction that the US economy would face deflation in the next 6 [...]