Interest Rates Will Rise Within The Year, Markets Bet

As growing global economic optimism begins to build, the market is betting that the Fed will raise interest rates by the end of this year. This will mean mortgages will get more costly and credit card APRs will rise, but the interest you make off your savings account will go up. [Bloomberg] (Photo: Ben Popken)


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  1. Gtmac says:

    “,but the interest you make off your savings account will go up.”

    30 year mortgage interest rates: 5.5%
    Credit Card APR: 9-23%

    Savings account interest rates: 1.5-2%


    • mac-phisto says:

      @Gtmac: well, mortgage rates are ~5.5% right now (no points), but, the average interest rate on a savings account is about 0.25%. you’d have to go out 2 or more years at most institutions right now to get 1.5-2%.

    • xenth says:

      @Gtmac: Shop around more. Plenty of places where you can get over 5% on reward checking accounts. Why use a savings account when it is a worse place to put your money?

  2. Snarkysnake says:

    Well , then, if this is true…The recovery is at hand.

    I guess the world didn’t end after all.

    Winners – People looking for jobs , investors , TV viewers that are sick of Noriel Roubini telling us that we will all be living in an appliance carton out by the interstate. Anyone with dreams for the future.

    Losers – Credit card companies (it took a financial crisis to wake everyone up to their shameful business practices) , irresponsible mortgage financiers (Angelo ,do you want the top bunk or the bottom ?), car company shareholders (the companies live on and the union will survive , but GM and Chrysler are bankrupt).Overpaid ,overperked CEO’s of giant banks.

    Oh yes , almost forgot ,the biggest loser of all – The taxpayers that will have to clean up the mess.

    • Jonbo298 says:

      @Snarkysnake: Everyone shunned grossly overpaid exec’s but not alot has been done overall. There is still grossly overpaid exec’s, shady practices in all sectors, all it did was weed out the ones that got caught.

      Within a few years we will forget this happened and we’ll be well onto the next meltdown. We didn’t learn from the Depression (hell, repealing a law brought due TO the Depression is essentially what started the mess again), didn’t learn from the 80’s, and we won’t learn again.

      • Snarkysnake says:


        I must agree , wise one. In fact we are in another bubble now…The Bailout Bubble.We are printing so much money and throwning it at every half assed ,cockamamie scheme and boondoggle that the economy is sure to improve simply because people have more of this “money” and want to get something for it before it loses its value. Unsustainably low interest rates back in 2001-2004 stoked the last bubble ,and rates are even lower (near zero) this time. Here we Go !!!

  3. Unsolicited Advice says:

    All inflationary signals. Let’s see some wage effects, please.

  4. Skankingmike says:

    mortgage rates have already gone up, and the problem is the higher the interest rates go the and the harder it is to get a mortgage you’re unlikely to see housing prices go up with it.

    we still have double digit unemployment, we have little to no rate of pay increase.

    The recession isn’t quite over yet.

    • mac-phisto says:

      @Skankingmike: i would actually say that the rate of pay has been decreasing lately. every time someone is laid off, someone else gets to pick up that slack (which equals less pay for more work). even most unions in my area have taken concessions lately that range from pay freezes to pay cuts to hour cuts (which translates into decreased pay).

      most troubling? state layoffs that translate into less teaching positions for our kids. personally, i’d much rather stand in line at the DMV for an extra hour if it means keeping a teacher in the classroom. (ugh. did i actually say that?)

      seriously though – my sister is in danger of losing her job as a science teacher b/c of a budget deficit in her state. her department already lost 3 teachers this year, there’s only her & 2 others left & one of them is going on maternity leave. 2 science teachers for an entire middle school? that doesn’t seem wise.

      • Skankingmike says:

        @mac-phisto: come to NJ no layoffs here :P

        • mac-phisto says:

          @Skankingmike: yeah, but then i’d be living in jersey. j/k. i used to live in south jersey (freehold/fort dix/six flags area). of all the places i’ve lived, that was one of my favorite. classic 80’s suburbia – you’d think E.T. was filmed there.

  5. Saboth says:

    Mortgages are already back up to 5.5+. I was trying to refinance for the past 2 months and couldn’t get anyone to answer an email or phone call. No point in refinancing now.

    • mac-phisto says:

      @Saboth: you’re right – 30yr is back up to 5.5%, but if you want to shorten your term, i think you can still get a 15 year for ~4.875%.

      the rule of thumb is, if you can shorten your term or drop your percentage rate by 1%, a refi is worth it.

  6. PencilSharp says:

    The Fed doesn’t really have much choice here. The Obama Administration wants to borrow trillion$, and the only way to attract more buyers of federal debt is with higher payouts.
    Combine that with the market’s legitimate fears that Obama will monetize our way out of these massive debts, and we’re looking at a nasty economy for at least ten years out, if not for an entire generation.

  7. theblackdog says:

    This is also why gas prices are going up, the speculators think the economy is coming back so they’re getting into the oil market again.

  8. captainpicard says:

    credit cards = teh sux, 13 months until I’m out of unsecured debt, I say let them go up.

  9. vladthepaler says:

    Good, I’m sick of these 2% CD rates.

  10. ARP says:

    I think rising interest rates + increasing gas prices + double digit unemployment = we’ll be in a recession for a while longer, despite some positive economic signals.

  11. nakedscience says:

    @Snarkysnake: Your comments are nearly impossible to read.

    • Snarkysnake says:


      “Your comments are nearly impossible to read.”

      Remedial education is available at reasonable prices. I will contribute the first dollar.

  12. Trai_Dep says:

    The biggest fear, by far, of economists looking at the Post-Bush economy was of the US falling into a liquidity trap.
    Rising interest rates, perversely*, is great news. It means that we can return to using both monetary and fiscal measures to guide the economy back to where it was before the Conservative/Free Market Fundamentalist types drove it deeply, deeply down a cliff.

    Wanna bet that, two weeks past recovery (six-odd months time), that these same blowhards fill our airwaves with the same tired, destructive, disproven policies?

    * During times of liquidity traps, up is down and down is up. We’re looking thru the Looking Glass, people!

    • Snarkysnake says:


      “Conservative/Free Market Fundamentalist types drove it deeply, deeply down a cliff.”

      You mean like , Cut taxes for people who are already wealthy and if they are in the mood , they will throw a few crumbs to everybody else while cheating on the taxes that they just had cut anyway ?

      Or do you mean de regulate big banks and other financial intermediaries so that they can inflate another bubble that will lead to a problem so large that only the taxpayers can foot the bill , in effect making everyone that works for a living a wage slave of TWO masters , big government AND big business ?

      Or , do you mean all of the above ?

      • MooseOfReason says:

        @Snarkysnake: The Federal Reserve caused the housing bubble by artificially low interest rates and inflating the amount of money in circulation by printing it out of thin air. It wasn’t deregulation. But maybe if you weren’t foaming at the mouth, you could point to specific regulations that were removed by “free market types.”

        • Snarkysnake says:


          Just a second…(Reaching for paper towel to wipe foam off of mouth)…

          Okay , How about Glass -Steagall ? Phil Gramm and other bought and paid for “free marketeers” helped repeal this depression era set of laws that kept banks , insurance and investment seperate (where they could not cross subsidize and hide malfeasance) . Disaster soon followed and Phil Gramm (and to be fair ,Bill Clinton ,who signed the law ) are collecting million$ while the economy is a train wreck. You people who think that you want a free market (because these large business entities told you to think that way ) are pathetic. The last thing that business wants is “an even playing field”. Billion$ are spent each year to ensure that the playing field is tilted toward whoever is spending those billion$. But , just like your belief in Santa Claus , you think that if left alone and unregulated (indeed , ignored) by the government , large companies will fill your life with joy and good jobs , money and happiness.

          Now. Government is no better. Government at its best is stupid , petty and mindless. But try driving on an interstate sometime. Those assholes that are driving like maniacs ? That’s what the free market would be like if there were no threat of justice, only EVERY FUCKING CAR ON THE ROAD WOULD BE DRIVING THAT WAY.

          Sweet Jesus , wake the hell up.

          • MooseOfReason says:

            @Snarkysnake: You left the Fed out of your explanation of why we’re in this mess. Do you not think it had something to do with it?

            About Glass-Stegall:
            “Since then, evidence has been found which strongly indicates that separated banking is riskier than unified banking. White (1986) has examined the failure rate in 1930-33 of national banks without security affiliates and national banks with security affiliates. He finds that banks without security affiliates were four times as likely to fail as were those with affiliates.”

            “This is complete balderdash. The SEC under George Bush has the biggest budget and the most personnel in its history. The charts below show the annual budgets and “full-time-equivalent” staff for the SEC by fiscal year. These numbers were obtained from the annual SEC reports archived here. (Note that there might be a slight discontinuity in the budget series in the year 2003, when the report format changed.)”

            No threat of justice? I’m not suggesting we get rid of the government or the court system. Also, people who only drive properly because of fear of violating the law are not rational.

            So, do you have anything for me to read? Can you refute any of my points?

    • chauncy that billups says:

      @Trai_Dep: “these same blowhards fill our airwaves with the same tired, destructive, disproven policies?”

      You sure you’re not talking about the Obama administration and long-since-disproven Keynesian non-restraint? 1.8 trillion dollar deficits? massive liquidity induced inflation? We’ve seen this all before, on a much smaller scale. It was called the Carter administration.

      See you in 6 months, if I can still afford an Internet connection, that is.

  13. MooseOfReason says:

    The natural way for interest rates to rise is for banks to not have as much savings, and thus less to lend to people, so they charge more interest.

    The other way is for the Federal Reserve to change the interest rate, irrespective of the amount of savings in the economy.

    Anyone want to tell me again how the “free market” got us here?