And FINALLY, you get the point. The reason borrowers are less concerned with being 'better off or worse off' is that they don't have a choice: they need a house - period. It isn't primarily an investment. Lenders however are treating the loan as an investment and therefore are far more concerned with making or losing money on it. Same result - different attitude. Inflation affects them similarly but the value-based effect is quite different.
-----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Michael Madigan Sent: Tuesday, 2 December 2008 9:49 AM To: ProFox Email List Subject: RE: [OT] How to determine if a market has hit THE bottom. You're missing the utility of having a roof over your head. People normally don't buy houses to make money, they buy houses to live in. ************************************************* Barack Obama is not My President http://www.cafepress.com/rightwingmike --- On Mon, 12/1/08, Geoff Flight <[EMAIL PROTECTED]> wrote: > From: Geoff Flight <[EMAIL PROTECTED]> > Subject: RE: [OT] How to determine if a market has hit THE bottom. > To: "'ProFox Email List'" <[email protected]> > Date: Monday, December 1, 2008, 5:50 PM > Really? Borrow $500,000 for a house at 10%pa while house > prices are rising > at an average 2%pa. Calculate in 30 years time how much you > paid compared to > how much the house is worth. YOU LOSE. Now try it the other > way around. YOU > WIN. Pretty basic really. > > -----Original Message----- > From: [EMAIL PROTECTED] > [mailto:[EMAIL PROTECTED] On Behalf > Of Nicholas Geti > Sent: Tuesday, 2 December 2008 9:13 AM > To: ProFox Email List > Subject: Re: [OT] How to determine if a market has hit THE > bottom. > > > ----- Original Message ----- > From: "Geoff Flight" <[EMAIL PROTECTED]> > To: "'ProFox Email List'" > <[email protected]> > Sent: Monday, December 01, 2008 5:20 PM > Subject: RE: [OT] How to determine if a market has hit THE > bottom. > > > That is not even close to true. Borrowers are better off if > inflation is > greater then the interest rate on the loan - otherwise they > lose. Same > applies to incomes: if your income rises more than > inflation then you are > ahead and vice versa. Simple mathematics really. > > > That is plain wrong. Interest rate has nothing to do with > the calculation. A > > borrower is always better off. In fact if you want to > consider the interest > rate on the loan, realize that it is a fixed amount based > on the original > face value of the loan and has nothing to do with the > inflation rate. > Therefore the interest paid in dollars remains the same. > > > [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[EMAIL PROTECTED] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
