Thursday, June 29, 2006

what will 5.25% do?

Everyone's probably heard about the Fed increase to 5.25%.
I wonder what it will do?

It certainly sent the market up, but I expect profit taking tomorrow to pull back at least some of what was gained today. The recent uplift did return my trading account balances to circa 4/30/06.

I've heard that countrywide was offering 5.25% MM before the increase (fully electronic, too).
Emigrant is at 4.85% for MM. I assume everyone will move up, with emigrant doing so slowly and gudgingly.

What will this do to prosper? Will it increase variable rate loans, var mortgages, etc... and increase bankruptcies and defaults? Will loan default rates for prosper increase?

I'm still very concerned with the deal flow at prosper. There doesn't seem to be enough quality borrowers, especially if you're looking for ones with strong credit.

There is a fundamental issue. 5.25% interest - is it real earnings or merely tracking inflation? How much extra are you really making?

It will negatively effect mortgage rates for anyone buying a new home. I imagine it will hit me in 1-2 years. But then again it may also improve rental rates.
Have a wonderful day,

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