More on No Brainers

I guess maybe we're all sick of hearing about the housing bubble. I know I can hear the air coming out of it in this neck of the woods. You know you're in trouble when shoeshine boys are speculating in real estate, to borrow a phrase. Or when there is an entire cable television channel in Naples dedicated to real estate. These are the harbingers of bubbledom. One that struck me the other day was the fact that it is apparently commonplace out here to enter into an interest-only loan.

Interest-only loans financed nearly 70 percent of the home purchases in San Francisco, Marin and San Mateo counties during the first two months of this year, based on data analyzed for the San Francisco Chronicle by LoanPerformance, a mortgage research firm. Just 18 percent of the home purchases in those three counties relied on interest-only loans during the same period in 2002.

The statistics were similar in San Jose, where interest-only loans accounted for 61 percent of home mortgages in January and February, up from 9 percent three years ago, Loan Performance said.

What are these people thinking? Okay, I guess that's easy: housing prices go up, and I'm livin' like a king! Pssssssss...