Negative mortgage rate

With negative interest rate, Denmark, Belgium and Netherlands banks are now offering negative mortgage rate to some borrowers.

I am wondering why we have not seen any near zero mortgage rate. I just checked 1 year libor, it has increased from 0.86% to 1.56% in the last year. This will make a floating ARM rate to about 4%, which is even higher than 30 year fixed rate. I feel that something is not right.

Our economy is too strong. So strong the Fed even wants to raise rate on us… :sob:

Inflation is low so there is no reason to raise interest rate. Economy growth is ok but no great. What’s the GDP growth rate? It barely beats the population growth plus the inflation rate.

Is it a possibility that libor rate is manipulated again? It does not make sense to have a floating ARM rate higher than 30 fixed rate. If it’s a real yield curve inversion, recession is not far off.

Everybody is talking about recession in 2017.

As long as FED is not raising rate, we will not see any issue for one or two years. Two sectors are suffering in USA.

  1. Oil/Energy.
  2. Healthcare.

I am not telling this just because DOW came down, but seeing this trend last one year (from Aug 2015 onwards).

If so the economy better show me some sign fast. I don’t even see any dark cloud on the horizon.

Stock market is usually 6-9 months ahead… not enough signal for you?

Stock market predicts 20 of the last 4 recessions.

Stocks were down in February and June…where is the recession?

The February predictions didnt come through

Libor has been flat for 7 years with a little blip when Fed raised last year…Still low interest rate environment with negative rates and deflation a bigger concern than inflation. .

Where is senseamp?

In South Lake Tahoe people are coming here from all over the country…Resturants are packed, Everyone is hiring, vacancies are 0 and rents are skyrocketing…It is not just the BA that is booming…

If everyone is talking about a recession, then the markets will climb a wall of worry. No one talked about the dotcom bust before it happened. All the finance magazines were about why you should only invest in tech stocks. No one talked about the recent recession until it happened. All the finance columns were about why real estate was the best investment.

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Everybody talking about bubble means it’s not a bubble. It seems there are more denial about the recovery than jubilation. I bet there is still plenty of room.

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At this point, I am not concerned about recession much. I do not understand why one year libor rate increased so much in the last year. Considering that libor is an international rate, it really surprises me. US only increases by 0.25%, Europe is not doing very well. What’s the reason for one year libor to be at 1.56%? One year US treasury rate is only 0.56%.

Just read an article from last year’s Economist on the rising Libor rate:

New SEC regulation makes it more expensive for foreign banks to borrow in dollars, and thus higher Libor rate. Most of the adjustment should have already happened by now.

The economist article is Aug 25th 2016 ! Now, current speculation is March FED rate hike !

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Market pushes even higher or cause a pull back?

German bond interest rate is almost -1%. French election may help us to lower interest rate again.

If there is a French Exit, we may get another super low mortgage rate, need to get ready to catch the last chance.

It is expected that they increase. If expected thing happens, it is a wild guess, no sanctity, market goes up ! Market is always Scary & Crazy !!

If interested, read this credit suisse report about US and other countries.

credit-suisse-global-investment-returns-yearbook-2017-en.pdf (1.9 MB)