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The macro economic money supply. More money in the economy causes inflation along with growth. When the gains are all concentrated at the top and everyone else is dealing with stagnant incomes and rising prices it can be a disaster.
Probably not. Money from “tax cuts for the rich” mostly ends up in secret offshore bank accounts. *Some* of the tax cut money will enter the economy via politician bribes, but much of that money probably also ends up in offshore accounts.
6% is getting up there especially at today selling prices. If that trend continues it means houses will be on the market longer and sellers would be forced to lower prices.
My first mortgage 1995 was >9%.
In the early 2000's it was >7%
Everything is relative I suppose.
Markets going is cycles is normal, houses selling in 2 days for more than asking price is not a normal steady state. *shrug*
My second home was mortgaged at 17%, late 70's. I loved the high interest rate because I was single and I rented out rooms to local college students, so my monthly out of pocket cost was less than zero and I got the advantage of a great tax write off. At the time, my payments were more than my income, I had to get a "Liar Loan" to qualify. Those are no longer available in this day and age.
OK, I confess, I enjoyed the benefit of the write off, and never declared the income. Young guys paying cash every month. I was very young, I got smarted and did things more on the up and up as time went by.
You never declared the income? Be careful, or you could end up in the federal pen for tax fraud.
The will still do that however they will get a lesser house for the same amount of money.
Exactly and now more of their payment will go to the bank instead of towards their equity in the home. I'm sure somebody will be along to explain how that is actually a good thing though.
Exactly and now more of their payment will go to the bank instead of towards their equity in the home. I'm sure somebody will be along to explain how that is actually a good thing though.
Good is always relative there. Higher interest rates help some, hurt others...just like when they fall.
For starters, higher interest rates cool home prices so the seller is going to get less and the buyer is going to have less mortgage for the same asset.
On top of that, the banks have to pay a higher rate for the capital they're lending out so bonds and so forth will pay higher returns which will help pension funds (which have been struggling) and retiree incomes.
Additionally, as it happened to me, if you buy cheaper when interest rates are high you can always refinance when they decrease or if you happen to sell you get nice fat gains on the sale when falling rates help the market heat up.
anyone with any knowledge of how our economy works knows interest rates tend to rise as the economy improves. and 6% really isnt all that high historically. obama's fed left rates so low for so long they had to come up at some point.
This.
I'm locked into 2.88% on a 15 year so let em rise!
This is of little concern to me (in fact, it's a positive since I am more often on the lending side), but I can't help but wonder how it hits the forgotten man and woman. Stable wages....at most up 1%, yet fuel up 10-20% and interest rates up 30-60%.
As it stands, the housing market in many areas has barely recovered (if that!) from the Great Recession, now this means the average person can afford less...
It looks like the Citibank Plutonomy memo is more true than ever. There is "us" and then there are the rest (most people!)..... https://delong.typepad.com/plutonomy-1.pdf
If you cannot afford to buy a house, rent one or an apartment. Home ownership comes with a lot of stress. Sometimes I think about selling and going back to renting.
Sure, it's nice to have my little kingdom. But hell, when the AC goes at the same time your car needs repairs ...
Rent! Renting is cool. You have an array of choices and you don't have to repair anything or weed anything. You have more flexibility. Easier to get out of lease and move 1000 miles away than to put your house on the market.
Rent!
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