Lets see, rates were 1% in June 2004 and as of today stand at 3.5%. That's a 250% increase! If anything else went up 250% in a little over a year, there would be riots in the streets. But we hear nary a peep from the legacy media. But let plywood go up 15% around hurricane time and the media has a fit. (Just proves: 1) they don't understand economics, and 2) they don't understand the free market. But I digress.)
So... interest rates were at historic lows 14 months ago. They had nowhere to go BUT up. Please explain to me why people continue to take variable rate loans?
"Lets see...I really can't afford this now, so I'll get an adjustable rate mortgage to help me qualify. Rates can't go down, so that means they'll probably go up, so I REALLY won't be able to afford this place in 3 years."
Wizards of economics, I guess.
Tuesday's Fed decision was followed by an announcement by commercial banks that they were increasing their prime rate, the benchmark for millions of consumer and business loans, by a similar quarter-point. That would put the prime at 6.5 percent, its highest point in four years.I rest my case.
"Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated," it added.Almost fell off my chair laughing at this one!! Low inflation in recent months?? Guess none of these guys buy gasoline. Pump prices are up over 45 cents since this time last year. That's an increase of approximately 23%!!! And increasing oil prices increase the cost of everything you buy that gets delivered. Last time I checked, there were a lot of items in WalMart that get delivered.
Its amazing how these guys can lie with a straight face.
One final thought...as interest rates rise, don't be surprised to see the housing market flatten out, or even deflate. The exorbidant price inflation in housing has been caused by or assisted by easy money at historic low rates.
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