Is it really high by historical standards? My parents rate was over 15%.
Also, if you had extra money laying around would you want to loan it out at 2-3%? I think 5-9% seems more reasonable rate of return for taking some risk etc. I don't understand why anyone would want to loan out for the low rates that we have been loaning money out at over the past 15 years.
onlyrealcuzzo · 2h ago
Nobody "lent" money to normal people at prime rates.
Almost the only people buying Treasuries are:
1) The Fed (to manipulate prices)
2) Foreign governments (because they basically have to for international trade to function)
3) Pension funds (because they are literally mandated by federal governments)
4) bond traders (who don't think the yield is an investment, but that they know where the price is headed and can make money selling at a better price in the near future)
5) 401k funds - of which US Treasures are typically a very small percentage, given that "bonds" as an entire asset class rarely exceeds 40%.
cosmotic · 2h ago
What were the housing prices like when they had that 15% mortgage?
People loan money out at lower interest rates for homes because it's low risk because of the colateral of the house.
Also, if you had extra money laying around would you want to loan it out at 2-3%? I think 5-9% seems more reasonable rate of return for taking some risk etc. I don't understand why anyone would want to loan out for the low rates that we have been loaning money out at over the past 15 years.
Almost the only people buying Treasuries are:
1) The Fed (to manipulate prices)
2) Foreign governments (because they basically have to for international trade to function)
3) Pension funds (because they are literally mandated by federal governments)
4) bond traders (who don't think the yield is an investment, but that they know where the price is headed and can make money selling at a better price in the near future)
5) 401k funds - of which US Treasures are typically a very small percentage, given that "bonds" as an entire asset class rarely exceeds 40%.
People loan money out at lower interest rates for homes because it's low risk because of the colateral of the house.