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Rates will remain very low for quite a while. Even when they go up, they won't go up very much - and considering that they're at historical lows right now, that means even AFTER they go up they'll still be very, very low compared to days past.
Back when we bought our house (1989) mortgage interest rates were at 10.5%. Rates are now at HALF that.
Oh they will go up (though it will be Q2 at the EARLIEST) - but rates will still remain very very low. They could go up 2 full points (which would be a LOT) and they would STILL be at exceptionally low levels. This is one area where the Fed is an a incredibly strong position. With prime rates being at virtually zero they have more room to go up than at ANY time in the past (ever) while still remaining relatively low compared to times past.
There are advantages to being an "old fart" - I can put current things (like interest rates) in some kind of perspective.
Oh they will go up - but rates will still remain very very low. They could go up 2 full points (which would be a LOT) and they would STILL be at exceptionally low levels. This is one area where the Fed is an a incredibly strong position. With prime rates being at virtually zero they have more room to go up than at ANY time in the past (ever) while still remaining relatively low compared to times past.
There are advantages to being an "old fart" - I can put current things (like interest rates) in some kind of perspective.
Ken
I remember 18% rates under Carter. Any increase in rates now is not helpful. It took and $8000 credit to get the housing market moving, any increase in rates will have a negative effect on the economy.
I remember 18% rates under Carter. Any increase in rates now is not helpful. It took and $8000 credit to get the housing market moving, any increase in rates will have a negative effect on the economy.
Not "helpful" - but not necessarily that detrimental either unless the increase is substantial (which is not likely).
Any rate increases are likely to be slow and gradual.
Oh they will go up (though it will be Q2 at the EARLIEST) - but rates will still remain very very low. They could go up 2 full points (which would be a LOT) and they would STILL be at exceptionally low levels. This is one area where the Fed is an a incredibly strong position. With prime rates being at virtually zero they have more room to go up than at ANY time in the past (ever) while still remaining relatively low compared to times past.
There are advantages to being an "old fart" - I can put current things (like interest rates) in some kind of perspective.
Ken
Quote:
Originally Posted by shorebaby
I remember 18% rates under Carter. Any increase in rates now is not helpful. It took and $8000 credit to get the housing market moving, any increase in rates will have a negative effect on the economy.
Who cares if interest rates go up when inflation is on the rise...in an ordinary economy this would mean wages go up too...but that ain't happening with Mr. Obama's idea that a family at $80K is rich.
Who cares if interest rates go up when inflation is on the rise...in an ordinary economy this would mean wages go up too...but that ain't happening with Mr. Obama's idea that a family at $80K is rich.
Sure - rates WILL rise eventually, so what?
The fact that the Fed is preparing for that is a GOOD thing since (as I said) rates will NOT remain at near zero levels forever. As the economy recovers rates will begin to rise - and that's the way it SHOULD be. Being prepared for that is GOOD planning.
Well wait a minute how is this miracle going to happen? There is a ton of excess liquidity out there how will it be mopped up?
Fed Proposes Selling Term Deposits to Absorb Excess Reserves - Yahoo! News (http://news.yahoo.com/s/bloomberg/20091229/pl_bloomberg/aioevbhcvfb4 - broken link)
Ken
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INFLATION.... ugh
