Friday, June 10, 2005

Interest-only mortgages--setting up a recession?

A Business Week article (link: entitled "The Home Loans Vexing Greenspan" by Peter Coy notes that Allen Greenspan is uncomfortable with the growth of interest-only mortgage loans. These appear to be most popular in California, although even Atlanta in the Southeast and Columbus in the Midwest see fairly heavy use of these mortgages. I don't think that you have to be a Alan Greenspan or a Dave Ramsey (Nashville-based debt opponent--see ) to see that interest-only mortgages need to be approached only with the greatest of care. For history buffs, consider that use of margin buying of securities in the 1920s was considered one of the major causes of the 1929 stock market crash and subsequent Great Depression.


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