Rates expected 2 rise to 5-6%, how does this affect investing?

Question

With the mortgage default rate expected to rise to 50% - interest rates are increasing daily. How does this affect what you are doing with your investments now? Should investors liquidate or rise out the storm? How do you think the economy will look like next year?

Bob B. · Answer

The lady that cuts my hair, sisters brother in-law is a car detailer and one of his employees said the guy that works on the lunch truck heard it on NPR.

Russell Brazil · Answer

They just made them up.

Guifre Mora · Answer

I'm very interested to know where you get your news and base this information on?

Guifre Mora · Answer

Thanks, Russell, I just wanted to be restrained on my response.

John Teachout · Answer

Also note that this post was her very first one on this site. 50% default rate? That's a pretty extreme view even for the worst case scenario.

Guifre Mora · Answer

That's because you are not in the same Facebook feed where this misinformation is coming from.

John Teachout · Answer

Who says the rates are going above 5%?

Caleb Heimsoth · Answer

@Russell Brazil I find myself to be a bit more in the negative side of how this all effects the future but this entire thread is just nuts.

50 percent default rate? If that ever happens we will be wishing for 2008 all over again compared to that

Lucy Hood · Answer

@Guifre Mora

This was based on what one of my lenders told me. He mentioned to me that with a higher default rate the loan packagers rates will increase. You pay your mortgage which goes to a loan packager (you may have another name for them) then the loan packager pays the federal government (FHA & USDA loans).

They government is giving leniency to consumers to pay their mortgage but not the loan packagers. People don’t have to pay the loan packager- but the packager is still expected to pay. With the risk being higher- interest rates by the loan packagers are going to steadily increase.

I was just curious if this had any affect on what people were doing investment wise. Keep my thumb on the pulse for all of my clients that are agonizing over what to do.

Isaiah Almasy · Answer

@Lucy Hood I was told they could drop to around 2% actually with the stimulus package.

Rates expected 2 rise to 5-6%, how does this affect investing?

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