So the currency shift, and its resultant impact on long rates (and therefore Real Estate), plays very much into our Bearish 2006 scenario.Consider the Yuan depegging in light of the increasing number of "exotic" mortgages: 30-Year Fixed mortgages are down to just over 40% from ~70% of all mortgages; Adjustable mortgages, up from under 10% to over 40%; Interest only mortgages, up to 20% -- from 0 in 2001.
Its hardly intelligent to take an APR when rates are at half century lows; Interest only mortgage holders don't really own their homes -- they are more like renters with an option to buy. Hey, that's the free market -- people are free to be as dumb a they want to be.
