First, read this article:
http://blog.stealthmode.com/2009/02/06/an-open-letter-to-my-two-mortgage-companies/
I, at first, wanted to join in the bashing that was going on in the various internet forums.
I scrimped and saved and paid off my home mortgage in about 6 years. I do coding/teaching/projects on the side and used it to pay off all my student loans and mortgages.
I think, much like the rest of you, that this person is a fool.
However, I have another angle. I used to work at a large bank. I have many friends who still work at the same large bank. Loans were set to fall below 5% (mostly commercial, mortgages are a different story).
However, this bank will not loan below 5%. Why? Because that what's the bank was forced to take from the government. Yes, the government forced the 10 largest banks to take money at 5%. This in turn caused the banks (at least the one I have inside info on) to set their lowest rates of 5%. This caused major problems with their computer loan systems b/c their were set to follow prime/LIBOR etc. My friends had to tell a lot of upset customers that their loans would not be falling below 5%.
So the banks will not/cannot loan at below 5%, like this person is asking, b/c the gov't has gotten involved. Now loans (commercial) and mortgages don't have the some source of funding (yet) but gov't intervention is pending in the mortgage market.
Now the new president/congress has promised to do something about it. How will they screw up the mortgage market?
We will find out in the next few months.
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