Interest rates have yo-yo’d down & up again a little over the past month or so but basically doubled this year.
The Federal Reserve is now doing a balancing act between keeping interest rates up to slow inflation and keeping interest rates low enough to stimulate the economy through this mild recession we are currently having.
Still interest rates are up near 100% from where they were six months ago. This is putting a damper on housing sales. It is my opinion that rates will stay near where they are for the next few years.
Loans not popular and even not available over the past decade are returning. Low or no income qualifying loans, ARMs (adjustable-rate mortgages) that offer a discount for the first few years to help people qualify, 40 year mortgages and even interest only loans, are all coming back!. (Just like the good old days of the early 2000’s)
The Federal Reserve Bank tries to keep a balance between stimulating the economy by lowering interest rates and curbing inflation by raising interest rates. Most economists believe government borrowing spurs inflation, because they always parallel. See Government Borrowing In Real Time. Most people have experienced a 15%+ increase in prices of housing, fuel, food and tangible goods over the past 12 – 18 months. On one hand that is serious inflation on the other, high prices are stifling the economy.
Two months ago I said, “I think interest rates will level off or drop a tad in the latter part of this year from the summer highs. It is traditional to bolster the economy during election times to support the incumbent party as this November has mid-term elections.” Maybe we’ll get lucky and they will lower rates a little.
If you have any questions, feel free to call me. Alex Schauffert 707 332 8301
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