Economics Interest rates. WTF? Why are we getting almost free money? - Page 2

**BigRedChief** · 03-02-2013, 06:40 AM

I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs.

We were able to lower the purchase price because we didn't have any closing costs.

Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII.

So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?

Hog Farmer · 03-02-2013, 10:32 AM

Obama's goal is NOT to pay off our debt.

LiveSteam · 03-02-2013, 11:02 AM

http://www.familysurvivalcourse.com/.../index_1_2.php

KC native · 03-02-2013, 11:23 AM

Quote:

Originally Posted by BigRedChief

I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs.

We were able to lower the purchase price because we didn't have any closing costs.

Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII.

So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?

You can thank ZIRP (Zero Interest Rate Policy for that) for that. Banks are borrowing at 0 or near zero rates. Take that free money and loan it out at 3% and you've got some healthy earnings for awhile.

Taco John · 03-02-2013, 11:32 AM

We were at 5.5% but when I noticed they were down to 3.5%, I jumped on the refinance train. Lower monthly payments, here I come!

**BigRedChief** · 03-02-2013, 12:08 PM

Quote:

Originally Posted by Taco John

We were at 5.5% but when I noticed they were down to 3.5%, I jumped on the refinance train. Lower monthly payments, here I come!

sumofabitch 3.5%!

La literatura · 03-02-2013, 12:16 PM

Ben Bernanke expects rates to remain this low for a few more years, but according to his testimony to Congress this past week, it will bounce back up to around 4-5% by 2017.

I was relieved to hear it.

**Mr. Flopnuts** · 03-02-2013, 12:19 PM

Quote:

Originally Posted by BigRedChief

I have good credit but not perfect at all. My debt to income ratio is average. Whats considered bad credit these days?

And now after I locked in I hear there are 3.3% loans out there.

It's changed since I've gotten out of the game I'm sure, but in my evaluations of credit worthiness, I started really digging in if the score was under 680.

FD · 03-02-2013, 12:39 PM

Short term rates are low because the Fed makes them low. Long term rates are not directly driven by the Fed, contrary to what some posters claim. The Fed owns about 10-15% of our debt, not significantly more than it historically has.

Long term rates can be thought of as cumulative short term rates plus inflation. Low long term rates tell us two things, that markets expect growth to remain low and inflation to remain low. Inflation over the past 4 years has been lower than in any other period since the Depression, and all market based measures of future inflation expect it to remain that way over the next 10 years.

A good way to think about interest rates is to read the posts of petegz28 and just reverse everything he says. That guy is just comically wrong about how interest rates and the economy work. He's been consistently wrong in his predictions for years now and has somehow not seemed to have noticed.

**petegz28** · 03-02-2013, 12:57 PM

Quote:

Originally Posted by FD

Short term rates are low because the Fed makes them low. Long term rates are not directly driven by the Fed, contrary to what some posters claim. The Fed owns about 10-15% of our debt, not significantly more than it historically has.

Long term rates can be thought of as cumulative short term rates plus inflation. Low long term rates tell us two things, that markets expect growth to remain low and inflation to remain low. Inflation over the past 4 years has been lower than in any other period since the Depression, and all market based measures of future inflation expect it to remain that way over the next 10 years.

A good way to think about interest rates is to read the posts of petegz28 and just reverse everything he says. That guy is just comically wrong about how interest rates and the economy work. He's been consistently wrong in his predictions for years now and has somehow not seemed to have noticed.

How am i wrong? Please explain how interest rates dont effect our currency and commdities denominated in such?

Btw, the fed has been buying the long end of the curve for quite some time now.

You can squak all you want about inflation being low and explain then to people who are paying double for gas that thy were 4 years ago

stonedstooge · 03-02-2013, 01:03 PM

Quote:

Originally Posted by petegz28

How am i wrong? Please explain how interest rates dont effect our currency and commdities denominated in such?

Btw, the fed has been buying the long end of the curve for quite some time now.

You can squak all you want about inflation being low and explain then to people who are paying double for gas that thy were 4 years ago

Gas prices are Bush's fault dumbass. Haven't you been listening?/Libtards

**petegz28** · 03-02-2013, 01:05 PM

Quote:

Originally Posted by La literatura

Ben Bernanke expects rates to remain this low for a few more years, but according to his testimony to Congress this past week, it will bounce back up to around 4-5% by 2017.

I was relieved to hear it.

Bernanke is a ****ing moron

**petegz28** · 03-02-2013, 01:06 PM

Quote:

Originally Posted by stonedstooge

Gas prices are Bush's fault dumbass. Haven't you been listening?/Libtards

How could i forgot

Dayze · 03-02-2013, 01:25 PM

One debt free next yr my wife and I are considering saving a ton of money and either buying a house cash, or only borrowing like 20%. Not sure of the pros or cons of it all just yet though

La literatura · 03-02-2013, 01:26 PM

Quote:

Originally Posted by Dayze

One debt free next yr my wife and I are considering saving a ton of money and either buying a house cash, or only borrowing like 20%. Not sure of the pros or cons of it all just yet though

Borrow! Low interest rates are great. Then you can put the cash into higher-returning investment portfolios.

-- not a financial adviser, but I'm reading a lot more into the world of investments and personal finance.

FD · 03-02-2013, 01:37 PM

Quote:

Originally Posted by petegz28

How am i wrong?

Exchange rates:

Gas prices:

03-02-2013, 06:40 AM
BigRedChief Brainwashed Join Date: Dec 2003 Location: Swims with fishes Casino cash: $2265057	Interest rates. WTF? Why are we getting almost free money? I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs. We were able to lower the purchase price because we didn't have any closing costs. Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII. So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?
Posts: 37,925

03-02-2013, 10:32 AM	#16
Hog Farmer Good Donkey = Dead Donkey Join Date: Nov 2001 Casino cash: $5081865	Obama's goal is NOT to pay off our debt.
Posts: 12,701

03-02-2013, 11:02 AM	#17
LiveSteam All aboard the crazy train Join Date: Dec 2009 Location: homeof43conferencetitles Casino cash: $41316	http://www.familysurvivalcourse.com/.../index_1_2.php
Posts: 12,164

03-02-2013, 11:32 AM	#19
Taco John 12on Paul Join Date: Jun 2001 Casino cash: $10084482	We were at 5.5% but when I noticed they were down to 3.5%, I jumped on the refinance train. Lower monthly payments, here I come! __________________ Ehyeh asher ehyeh.
Posts: 49,357

03-02-2013, 12:16 PM	#21
La literatura MVP Join Date: Nov 2011 Casino cash: $50809	Ben Bernanke expects rates to remain this low for a few more years, but according to his testimony to Congress this past week, it will bounce back up to around 4-5% by 2017. I was relieved to hear it.
Posts: 7,171

03-02-2013, 12:39 PM	#23
FD Veteran Join Date: Dec 2006 Location: Austin, TX Casino cash: $1003149	Short term rates are low because the Fed makes them low. Long term rates are not directly driven by the Fed, contrary to what some posters claim. The Fed owns about 10-15% of our debt, not significantly more than it historically has. Long term rates can be thought of as cumulative short term rates plus inflation. Low long term rates tell us two things, that markets expect growth to remain low and inflation to remain low. Inflation over the past 4 years has been lower than in any other period since the Depression, and all market based measures of future inflation expect it to remain that way over the next 10 years. A good way to think about interest rates is to read the posts of petegz28 and just reverse everything he says. That guy is just comically wrong about how interest rates and the economy work. He's been consistently wrong in his predictions for years now and has somehow not seemed to have noticed. __________________ Homer: [looking at watch] Two hours? Why'd they build this ghost town so far away? Lisa: Because they discovered gold over there! Homer: It's because they're stupid, that's why. That's why everybody does everything.
Posts: 3,122

03-02-2013, 01:25 PM	#28
Dayze Poop Join Date: Nov 2003 Location: Overland Park Casino cash: $1178013	One debt free next yr my wife and I are considering saving a ton of money and either buying a house cash, or only borrowing like 20%. Not sure of the pros or cons of it all just yet though __________________ Life is 99% inspiration, 1% Perspiration, and 1% Attention to Detial.
Posts: 15,481

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