Hey guys. Since interest rates are likely due to rise, are they likely to rise slowly over time? When they were falling, the Fed was doing it by like .25% each quarter (or whatever it was). Is it likely to rise at the same rate as it fell? Thanx.
It’s difficult to forecast interest rates with any level of accuracy. Think of rates as a big pendulum, if you push to hard you are going to miss your target and swing wildly to the other side. This is what the Fed tries to avoid by making the small incremental adjustments. I would expect them to raise rates in a similar fashion unless a we have a very significant inflationary signal causing them to double down on the adjustment. Just my 2 cents.
they meet in early august but i highly doubt they raise them then. with the housing mess in the shape its in, they probably want this low interest rate so people can get loans to buy up the surplus. + oil has dropped almost $20 a barrel in the last 2 weeks so that help keep the rate where it’s at.
If you watch videos about the mortgage bailouts you can see that they want rates low and are hoping to boost buyer confidence. its pretty simple if the market continues to tank, then those debts will be huge costing the government / tax payers more. they are hoping to boost confidence, have people buying again, soak up the home surplus and then boost rates.
letting people get access to low rate loans is their best way to get out of this mortgage mess as clean as possible.
If they do raise rates to fight inflation it will be small nibbles I would expect. A big rise would cause the housing market to get even worse and we/they can not have that.
Just my 2 cents.
Well that’s encouraging. I’ve noticed that my credit card rate is below 8%. It makes it easier to pay down the high interest revolving debt. I also have a revolving line of credit that is tied to the prime rate. I haven’t paid more than 7%. The past 6 months its been 5.75%. It’s not an adjustable rate. Its similar to a credit card. I just want to hammer away at that debt while the rates are low.
Interest rates for mortgages don’t follow the rates set by The Fed as much as The Fed would probably like them to.
I don’t care what the government is claiming as the inflation rate, we’ve got some serious inflation going on. (oh yeah, according to the government, it isn’t all that bad as long as you don’t count fuel, food, shelter, clothing, electricity, or water.)
If a bank makes you a mortgage for 6% today, the payment you make isn’t keeping up with inflation and the bank is losing real value every year on that mortgage.
The banks are bleeding. they need to move inventory, but it can’t be too much longer before some CEO wakes up and realizes that they should be charging the inflation rate PLUS a couple more percent— mortgages have usually run about 2-3% plus the % rate of inflation. So if inflation is 6% a year, the banks will be charging 8-9% for their best qualified loans.
Back when the inflation rate was 13%, you couldn’t get money from anywhere for less than 16%.
When my parents bought their first house, no one even knew what inflation was and their mortgage was 2 1/2%.
The Fed will probably ease rates up very slowly. That doesn’t mean the banks will.
Inflation is the key.
The financial market will work itself out. Rates must go higher due to many different factors. The rates the Fed was cutting were short term rates - which was done to spur consumer spending - which historically has a short-term negative effect.
Mortgage interest rates rising now has to do the overall market correction and that has alot to do with INFLATION.
tatertot put it right - as inflation rises - so must the interest rates. period.
Well then again we have to think what happens to home prices as well… If interest rates rise doesnt it follow that home prices sink? As they become less affordable…
I don’t think it will matter if the rates stay low. If consumer confidence is low, they may hold off buying a home. If unemployment steadily rises, along with prices for goods, people may not be able to afford a mortgage. I saw that happen in 2000 - 2001 in my area.