Fed Keeps Interest Rates At .25%
Interest rates will stay at at a low low .25%, the Fed announced today. For you this means...
...mortgages will stay cheap, provided you have the stellar credit needed to get one, and savings accounts will continue to generate low, but safe, returns. They also said rates will stay low for an "extended period." Growth may be picking up, but unemployment remains high. August home sales fell, too, for the first time in four months. It seems the slog to economic recovery will be anything but short.
Fed Signals Growth Return Not Enough to End Stimulus [Bloomberg] (Photo: frankieleon)
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Comments:
Savers get the shaft again!
Just what we need to get us out of the bad economy.
They (the Fed Reserve) blame the bad economy on loans that were given out to everyone who wanted one. And now they want to give out more loans to anyone who wants one to get us out of the trouble started by the loans given out to anyone who wanted one. REAL SMART.
Actually it's what they want is more bad economy. They want it to fall so they can bring in a new currency like the euro. And eventually a one world government with one international currency controlled by a one world bank. But don't beleive me, I'm just a crazy person.
@Tightlines: Because the definition of a depression is: A long drawn out reccession. Which is what we have... a long drawn out reccession.
@hi: here's one source out of many:
The yourDictionary Web site defines an economic depression as a prolonged period of recession, or a significant and prolonged downturn in the economy. Characteristics of an economic depression include declining business activities, falling prices, rising unemployment, increasing inventories, public fear and panic.
They are just postponing the inevitable, even though home prices are off 40% from the peak they are still being kept artificially inflated thanks to low interest rates. I would really like to buy a house in the next 6 months or so and I was actually hoping interest rates would go, not only would that help my savings grow but it would help the homes I'm looking at be more affordable, especially since I plan on putting at least 25% down. I am very hesitant to buy with interest rates so low because that just mean you overpaid for the house and as soon as the rates go up, which they have to eventually, the value of the house will go down.
@hi: I read someplace someone described Bernanke saying "the recession is over" is like a pilot emerging from an air disaster and proclaiming "the plane crash is over!".
BFD. It means nothing if they won't let me set my old students loans at the current .25% rather than the 4-5% + Libor that I'll be taking in the ass for the next 25 years.
@hi: Aside from the last paragraph you make sense (I don't know anything about that, so it could be right), but I want you to be wrong. Hmmm.
@CappyCobra: that's the point of a low interest rate...
they want you to go out and spend, to borrow money you don't have and spend it, stimulating the economy.
@hi: Employment always lags the overall economy. It appears we now have economic growth again (starting this quarter) and we aren't at 10% unemployment. We probably will reach 10% but many recessions that were not depressions reached above 10%.
And where are these falling prices? If you point to oil or other commodities, does that mean we had an ultra-economy in 2008 since the prices went through the roof?
Declining business activity marks both recessions and depressions, so that criteria (at least from your comment) does not help in discerning differences between the two.
Public fear was rampant in some political groups from 2001-9, so does that mean we were in a depression all those years?
@jscott73: Until the massive inflation means that housing prices will go back up because the dollar is worth so much less.
@futuresuperbowlMVPJayCutler: Given the second paragraph, you're still thinking there's facts behind the first paragraph?
@futuresuperbowlMVPJayCutler: watch this 10 minutes video. Walter Crokite explains it better than me and Hillary Clinton makes her appearance at the end.
+ Watch video
Honestly, if you can get a mortgage, now is a great time to buy a house, only made more perfect if they extend the homebuyer's credit beyond November 30th (which I believe they will).
Eventually rates will be raised and if the specter of inflation is even half true (I read one estimate of 10+% inflation!) then having a mortgage fixed at 5.8-ish... that will be a sweet deal in ten years.
@tailstoo: yeah i've heard that argument a couple times lately, i don't dismiss it entirely i just don't see enough evidence for it, the article points about all the "slack" we still have in the manufacturing economy that will have to be eliminated before inflation is a concern but i do understand we just keep printing more and more money but that money all goes to the bank, nobody is actually spending it they are just sitting on it for now so hopefully the fed can start buying it back before it floods the markets. will be an interesting thing to watch.
@hi: And another 10 minute video:
+ Watch video
STEP 1 & 2 Kill The Economy , Produce One World Currency
@hi: I think most people in power are already invested in Euros, and would therefore want to keep the dollar around so that they can buy stuff cheap
@dragonfire81: yeah, don't know how it can be over....since i basically got laid off from a job I HADN'T EVEN STARTED because of budget cuts.
@Al Swearengen: Um, no one gets the "wholesale" rate of .25% on any loan. It's a target rate at which banks can borrow money from the government.
For the savers out there, this is such a joke. My ING savings account is at 1.30%. Meanwhile, the local bank offers a whopping .05%. It's pissing me off.
@hi: The thing that's regrettable is that there are vast, powerful forces conspiring to enrich themselves at the other 80% of Americans' expense.
They're the very corporations that some people here think should be given no oversight or reasonable regulation by a government powered by grassroots citizens.
The tragedy is that positions like yours make the above, reasonable conclusion, with reasonable, actionable ways to combat a corporate government takeover that much harder. And the fact that (I'm betting) you think the government is always the problem, never the solution. Am I right?
@TuxthePenguin:
Or you can just wait for housing prices to fall even more. The amount of money you can save on the purchase price down the road will be more significant than savings in low interest rates, a tax credit and of course the carrying costs of the purchase in the mean time. The housing contraction has just begun so buying now may not be a wise move.
Generally speaking, if my monthly payment was the same I would rather have a low principal and a high interest rate than a high principle and a low interest rate.
If you have a stellar credit score and three lines of credit that is. For those of us who didn't go hog-wild with credit cards for t-shirts in college, we're still getting the shaft trying to get a house.
@Al Swearengen: Something tells me you don't have the capital or the potential for capital to lock in the prime rate, usually reserved for, y'know, global financial institutions and government entities. And if you did have that kind of capital, I don't think you'd be worrying about student loans.
The .25% is the prime rate at which preferred financial institutions can borrow from the Feds, and it means a lot more than nothing because that rate determines what percentage you borrow at your student loans.
@linkura:
I hear that. I finally get to a point in my life where I have real money in savings, and the interest rate is straight out of mid-90s Japan. =(
@jscott73: The amount that your savings money would grow is much, much less than the amount that you would pay if interest rates were to go up... by many thousands of dollars. Unless you have 30x the amount of a house in savings...
@sponica (now with MORE caffeine): Somebody let Bernanke know that the definition of a recession is whether you have a job or not.
@hi: ... I was almost with you until you kept going. That paragraph, though, helps explain the "depression" remarks from the earlier thread... you're just detached from reality.
@MichaelBrazell: i know it's probably not the real definition....but it's the real world definition.
@linkura: I've moved to SmartyPig for the time being. Their rate is has dropped by more than a point in the six months I've had them, though, so it might not be worth the ten minutes it'd take to move.
I'm also taking every reasonable opportunity to tell ING why I've moved and how I want to come back. Between their less-than-stellar savings rates, sad CD rates, and failure to offer fix-rate mortgages, I'm not using them for much or recommending them to anybody. The bitching is an act of love: I really like ING Direct, but that's because they used to great products, rates, and service. Their excellent service just doesn't make up for their sad offerings right now.
@nnj: Yes, you summed it up better than I...thank you.
It's hard to look at an $8k tax credit as an incentive to buy now when I routinely see home prices drop $10-20k at a time.
@nnj: A single percentage point in interest rates is tens of thousands of dollars. If you locked in at, say, 4.5% on a $200,000 mortgage, versus, say, 6.25% on the same, you'd save almost $85,000 in interest over 30 years. While the market may continue to drop, it's unlikely that many $200,000 properties are going to drop by $80,000 or more.
On the second point, you'd much rather have a high principal payment because that means you're getting more equity on your house faster. If you have to pay PMI, which most younger buyers do, then you'd rather be making payments towards principal than towards interest. But, generally, you pay almost all interest when starting the loan anyway. You can never sell what you've paid on your interest, but you CAN sell or refinance what you've paid towards your principal.
@sponica (now with MORE caffeine): I'm not ally of Bernanke, but I'd rather he talk in real definitions than in populist anecdotes.
@icy_one: See, there's your problem. If you had gone for the T-Shirt/Credit Card combo, not only would things be good for you now, but you would have had more t-shirts, so you could put off laundry even more.
@MichaelBrazell: agreed, but in today's economy if interest rates go up home prices would have to go down, by tens of thousands of dollars, i would rather overpay on interest that i can refinance later then overpay on a home because the prices are being held artificially high.
And what was that Bernanke was saying about the recession being over?