Last tuesday’s class was interesting. Well, more to the point, the lecture went totally over my head. Then after break, we recovened and talked in a more accessible fashion. Fixed Rate v Variable Rate loans, the option to default or prepay the loan made for some very interesting analyses. Defaults are low penalty ways to break a lease if ones house becomes worth less than the amount remaining to be paid on the mortgage (hedging against massive property value loss). Given that variable rate mortgages are based on the rates at which the banks can borrow from the federal government, they remove all risk for banking corporations (and are designed to generally perform better over the long run than fixed rates). I’d go in to greater depth, but that would take time, and I have much catching up on lj to do. =)