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I think the most telling statistic was something I read in this week's BusinessWeek - two years ago, 8% of the mortgages taken out nationwide were interest-only, now 31% are interest only. In San Diego county, 81% of mortgages are interest-only or ARMs.
People are counting (BETTING) on the fact that houses always appreciate - pure speculation..
My bet for the cause of the collapse is when other countries decide enough is enough and they stop financing our deficit. Interest rates will rise 2-4% overnight, and those ARMs/interest-only mortgages will be a prison..
I don't think people realize how precariously this economy is balanced on ultra-low interest rates. There are a multitude of things that could cause interest rates to jump.
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