From: johnwheeler79@msn.com (John Wheeler)
Newsgroups: misc.invest.real-estate
Subject: Re: Prime Rate
Date: 9 Apr 2004 09:06:56 -0700

Thanks!!

> I can't tell where you got the silly notion that "they don't make
> any money" lending at the prime rate.  Doesn't matter.  They do.
> Humongous bunches of money these days with prudent savers and
> investors being forced by Greedspan's criminal rampage to lend
> money to *them* at one or one and a fraction percent per annum,
> wildly below the current rate of inflation.  Prime rate always
> has been a profitable lending rate, currently wildly profitable.

dont understand, but OK. I thought lenders only made money on interest
above the prime rate, points, closing costs... I thought government
loan money to banks at the prime rate, so that money taken.

> 
> In a way, the "customer loyalty" theory sort of holds together in
> the sense that in a *rising* interest environment, what you all
> but inevitably face in the near future, you're gonna be stuck as
> a two wheel drive in quicksand with that loan at prime.  Prime is
> a *floating* rate.  It goes Up UP and *UP!* when interest rates
> are rising in the general market.  Doesn't even necessarily take
> any time about moving on up (against your theory of having gotten
> a "bargain").

I hate it then!!

>     Now, when fixed rate borrowing is the only kind you should 
> reasonably be considering, in your own interests, you're talking 
> about going into one of the wildest of the floating rates.  To 
> add misery to insult, you're going to find it extremely difficult 
> to refi in the rising interest rate market as it unfolds.  "Let's 
> see if we can get some more floating rate paper onto the books 
> before rates start ratcheting up" is the game being played.  You 
> want to play, okay it's your future, but don't delude yourself 
> that prime is any bargain under these conditions.
>     Boob    :-)##


Thanks!