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Old 03-02-2013, 06:40 AM  
BigRedChief BigRedChief is online now
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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?
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Old 03-02-2013, 10:32 AM   #16
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Old 03-02-2013, 11:02 AM   #17
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Old 03-02-2013, 11:23 AM   #18
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Quote:
Originally Posted by BigRedChief View Post
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.
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Old 03-02-2013, 11:32 AM   #19
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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!
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Old 03-02-2013, 12:08 PM   #20
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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%!
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Old 03-02-2013, 12:16 PM   #21
La literatura La literatura is offline
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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.
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Old 03-02-2013, 12:19 PM   #22
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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.
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Old 03-02-2013, 12:39 PM   #23
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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.
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Old 03-02-2013, 12:57 PM   #24
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Quote:
Originally Posted by FD View Post
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
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Old 03-02-2013, 01:03 PM   #25
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Originally Posted by petegz28 View Post
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
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Old 03-02-2013, 01:05 PM   #26
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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
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Old 03-02-2013, 01:06 PM   #27
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Gas prices are Bush's fault dumbass. Haven't you been listening?/Libtards
How could i forgot
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Old 03-02-2013, 01:25 PM   #28
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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
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Old 03-02-2013, 01:26 PM   #29
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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.
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Old 03-02-2013, 01:37 PM   #30
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How am i wrong?
Exchange rates:


Gas prices:
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