Posted by: Alexandre Borovik | January 10, 2009

Failure to account for negative numbers in modelling

From BBC:

The latest fall in interest rates, and its knock-on effect on mortgage rates, has raised the interesting possibility that some lenders may soon have to start paying interest to some of their mortgage customers. 

These are the ones who, in the course of 2007 and even into last year, took out tracker deals that specified the interest rate would be at a margin below the Bank of England’s base rate. 

Most likely you have not noticed that, but a few years ago there was a period of negative wholesale prices for natural gas.

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