[extropy-chat] Redistribution of wealth

[Adrian Tymes]

And don't forget the transaction costs associated with
each shift of money.  Some places live off the
transaction costs alone, and sell the mortgage itself
for someone else (who is more interested in stable,
long-term investments than immediately optimal
investments) to deal with.

--- Kevin Freels <megaquark at hotmail.com> wrote:

> Sounds good, but one in the hand is better than two
> in the bush. Also, the
> lender likely borrowed the funds themselves from
> elsewhere at a lower
> (prime) rate and since rates are higher in this
> scenario, the lender sells
> the new higher rate loan, but also has a higher
> cost. The margin remains
> roughly the same. The lender makes no more money in
> a high rate environment
> vs a low rate environment. Meanwhile, low rates
> attract more investors and
> homebuyers which in turn means more loans are
> written. In high rate
> environments, there are less loans to go around and
> the lender isn;t
> guaranteed to get a new loan at all.
> 
> 
> 
> 
> 
> ----- Original Message ----- 
> From: "Matthew Gingell" <gingell at gnat.com>
> To: "ExI chat list" <extropy-chat at lists.extropy.org>
> Sent: Wednesday, September 29, 2004 1:03 PM
> Subject: Re: [extropy-chat] Redistribution of wealth
> 
> 
> > Kevin Freels writes:
> >
> >  > Contrary to popular belief, banks are simply
> not in the business of
> taking
> >  > properties. It serves them no purpose. Most of
> the time, they lose
> money on
> >  > a foreclosure. The rest of the time, they get
> the balance of their
> loan, any
> >  > costs it took to get their money, and the
> remaining portion of the
> proceeds
> >  > go to the former owner. They make their money
> off interest and they
> make
> >  > interest by making loans, not the other way
> around.
> >
> >  That isn't always true. Imagine you're a bank:
> You issue a 30 year
> >  fixed mortgage at 6% and rates subsequently go up
> to 7%. You would
> >  very much like to foreclose, get your principal
> back on the 6% loan,
> >  and lend it out again at the higher rate.
> Otherwise your money is
> >  stuck in a less that market rate investment for
> 30 years.
> >
> >  -Matt
> > _______________________________________________
> > extropy-chat mailing list
> > extropy-chat at lists.extropy.org
> >
>
http://lists.extropy.org/mailman/listinfo/extropy-chat
> >
> _______________________________________________
> extropy-chat mailing list
> extropy-chat at lists.extropy.org
>
http://lists.extropy.org/mailman/listinfo/extropy-chat
>