Do interest rates worry you?

[SD Realtor]

“Back in 2006 I was expecting 30 years fixed to be around 8% by now. Obviously I was wrong.”

heheheh –

I can beat that… back in 2004 I was expecting rates to be in the 8% range by 2006. I gave up long long ago trying to justify that things have to happen.

JWM I THOROUGHLY agree with your argument that in the future rates will have to go up. I simply do not see how they cannot. However I am not so sure they will happen in the timeframe you are speaking of or at the pace you are hoping for… Personally I would love to see it happen as well because for me as a potential buyer with alot of cash saved up, it would serve to increase my purchasing power, somewhat. However I have given up trying to make statements such as this or that HAS to happen.

In reality, nothing HAS to happen, yes things can/will eventually snap under the burden of debt. However to doubt the will of the powers that be to use EVERY tool at thier disposal to continue to keep the consumer buying is something that I stopped trying to do. I am amazed at the tenacity of these same powers that be. They have proven time and time again that they will continue with every ounce of energy to prop things up and let the reins out until they run out of leather.

We have already given the screw you signal to foreign investors who lost billions in MBS. Can and will we do the same for treasuries? I would think no we won’t but… well I think there is a big but there. For all of the problems it would cause us there are big problems that it would cause our creditors as well if they said, screw you USA.

Can all this keep a low treasury yield forever? No way jose…Again, I do indeed agree with your line of thought. Just not as sure of the time frame as you are. I do think Ben will adjust them if he can get a couple months of stable economic numbers. I don’t see him cranking them like he should but he will most likely nudge them.

Also we will be alot healthier financially to suck it up and raise the rates… Can’t help but wonder where rates would be if Volker was running the show right now.

SD Realtor

[NotCranky]

“Also we will be alot healthier financially to suck it up and raise the rates…”

Healthier also might mean that confidence and buying power is restored enough to offset rate increases especially on the heels of any possible “over correction”.”Healthier” will also coincide with supply/demand factors being more balanced. I know I am beating a dead horse but a direct correlation is not guaranteed and definitely not across the board to any and all areas and properties. Too many variables. Yes houses are going to keep coming down and in the current enviornment higher rates would be destructive to pricing in general. We don’t know what the enviornment will be like when rates go up.

[NotCranky]

“Also we will be alot healthier financially to suck it up and raise the rates…”

Healthier also might mean that confidence and buying power is restored enough to offset rate increases especially on the heels of any possible “over correction”.”Healthier” will also coincide with supply/demand factors being more balanced. I know I am beating a dead horse but a direct correlation is not guaranteed and definitely not across the board to any and all areas and properties. Too many variables. Yes houses are going to keep coming down and in the current enviornment higher rates would be destructive to pricing in general. We don’t know what the enviornment will be like when rates go up.

[NotCranky]

“Also we will be alot healthier financially to suck it up and raise the rates…”

Healthier also might mean that confidence and buying power is restored enough to offset rate increases especially on the heels of any possible “over correction”.”Healthier” will also coincide with supply/demand factors being more balanced. I know I am beating a dead horse but a direct correlation is not guaranteed and definitely not across the board to any and all areas and properties. Too many variables. Yes houses are going to keep coming down and in the current enviornment higher rates would be destructive to pricing in general. We don’t know what the enviornment will be like when rates go up.

[NotCranky]

“Also we will be alot healthier financially to suck it up and raise the rates…”

Healthier also might mean that confidence and buying power is restored enough to offset rate increases especially on the heels of any possible “over correction”.”Healthier” will also coincide with supply/demand factors being more balanced. I know I am beating a dead horse but a direct correlation is not guaranteed and definitely not across the board to any and all areas and properties. Too many variables. Yes houses are going to keep coming down and in the current enviornment higher rates would be destructive to pricing in general. We don’t know what the enviornment will be like when rates go up.

[NotCranky]

“Also we will be alot healthier financially to suck it up and raise the rates…”

Healthier also might mean that confidence and buying power is restored enough to offset rate increases especially on the heels of any possible “over correction”.”Healthier” will also coincide with supply/demand factors being more balanced. I know I am beating a dead horse but a direct correlation is not guaranteed and definitely not across the board to any and all areas and properties. Too many variables. Yes houses are going to keep coming down and in the current enviornment higher rates would be destructive to pricing in general. We don’t know what the enviornment will be like when rates go up.

[capeman]

Asianautica, how do you think the Fed control’s rates? What is the extent of their balance sheet used to control their target rate? Treasuries! Now tell me why rates have been so low for the last 8 years. Other countries buy our gov’t debt and drive down rates in the process. Now tell me what happens when the foreign debt buyers see that the paper being tendered at the Fed for said Treasuries includes bad mortgages, credit card debt and even auto loans (all non AAA paper). You’ll see foreign buyers running for the door. Here’s a nice image of when this happened last when the Fed did not stop the nonsense and poor lending practices.

[img_assist|nid=7574|title=Long bond chart during the Depression|desc=|link=node|align=left|width=466|height=411]

Now look at how much of its balance sheet the Fed has committed to this so far.

[img_assist|nid=7575|title=Fed Assets|desc=|link=node|align=left|width=466|height=280]

The closer that gets to bottom the closer we are to a bond market dislocation. Then low rates are a thing of the past and the Fed can’t do anything to stop it.

[capeman]

Asianautica, how do you think the Fed control’s rates? What is the extent of their balance sheet used to control their target rate? Treasuries! Now tell me why rates have been so low for the last 8 years. Other countries buy our gov’t debt and drive down rates in the process. Now tell me what happens when the foreign debt buyers see that the paper being tendered at the Fed for said Treasuries includes bad mortgages, credit card debt and even auto loans (all non AAA paper). You’ll see foreign buyers running for the door. Here’s a nice image of when this happened last when the Fed did not stop the nonsense and poor lending practices.

[img_assist|nid=7574|title=Long bond chart during the Depression|desc=|link=node|align=left|width=466|height=411]

Now look at how much of its balance sheet the Fed has committed to this so far.

[img_assist|nid=7575|title=Fed Assets|desc=|link=node|align=left|width=466|height=280]

The closer that gets to bottom the closer we are to a bond market dislocation. Then low rates are a thing of the past and the Fed can’t do anything to stop it.

[capeman]

Asianautica, how do you think the Fed control’s rates? What is the extent of their balance sheet used to control their target rate? Treasuries! Now tell me why rates have been so low for the last 8 years. Other countries buy our gov’t debt and drive down rates in the process. Now tell me what happens when the foreign debt buyers see that the paper being tendered at the Fed for said Treasuries includes bad mortgages, credit card debt and even auto loans (all non AAA paper). You’ll see foreign buyers running for the door. Here’s a nice image of when this happened last when the Fed did not stop the nonsense and poor lending practices.

[img_assist|nid=7574|title=Long bond chart during the Depression|desc=|link=node|align=left|width=466|height=411]

Now look at how much of its balance sheet the Fed has committed to this so far.

[img_assist|nid=7575|title=Fed Assets|desc=|link=node|align=left|width=466|height=280]

The closer that gets to bottom the closer we are to a bond market dislocation. Then low rates are a thing of the past and the Fed can’t do anything to stop it.

[capeman]

Asianautica, how do you think the Fed control’s rates? What is the extent of their balance sheet used to control their target rate? Treasuries! Now tell me why rates have been so low for the last 8 years. Other countries buy our gov’t debt and drive down rates in the process. Now tell me what happens when the foreign debt buyers see that the paper being tendered at the Fed for said Treasuries includes bad mortgages, credit card debt and even auto loans (all non AAA paper). You’ll see foreign buyers running for the door. Here’s a nice image of when this happened last when the Fed did not stop the nonsense and poor lending practices.

[img_assist|nid=7574|title=Long bond chart during the Depression|desc=|link=node|align=left|width=466|height=411]

Now look at how much of its balance sheet the Fed has committed to this so far.

[img_assist|nid=7575|title=Fed Assets|desc=|link=node|align=left|width=466|height=280]

The closer that gets to bottom the closer we are to a bond market dislocation. Then low rates are a thing of the past and the Fed can’t do anything to stop it.

[capeman]

Asianautica, how do you think the Fed control’s rates? What is the extent of their balance sheet used to control their target rate? Treasuries! Now tell me why rates have been so low for the last 8 years. Other countries buy our gov’t debt and drive down rates in the process. Now tell me what happens when the foreign debt buyers see that the paper being tendered at the Fed for said Treasuries includes bad mortgages, credit card debt and even auto loans (all non AAA paper). You’ll see foreign buyers running for the door. Here’s a nice image of when this happened last when the Fed did not stop the nonsense and poor lending practices.

[img_assist|nid=7574|title=Long bond chart during the Depression|desc=|link=node|align=left|width=466|height=411]

Now look at how much of its balance sheet the Fed has committed to this so far.

[img_assist|nid=7575|title=Fed Assets|desc=|link=node|align=left|width=466|height=280]

The closer that gets to bottom the closer we are to a bond market dislocation. Then low rates are a thing of the past and the Fed can’t do anything to stop it.

[kev374]

It doesn’t matter, affordability is what it is. If interest rates rise then prices will come down even more to get in line with affordability so that it creates sufficient demand to sustain the price level.

We really need to INCREASE interest rates ASAP to prevent inflation from spiraling out of control.

[kev374]

It doesn’t matter, affordability is what it is. If interest rates rise then prices will come down even more to get in line with affordability so that it creates sufficient demand to sustain the price level.

We really need to INCREASE interest rates ASAP to prevent inflation from spiraling out of control.

[kev374]

It doesn’t matter, affordability is what it is. If interest rates rise then prices will come down even more to get in line with affordability so that it creates sufficient demand to sustain the price level.

We really need to INCREASE interest rates ASAP to prevent inflation from spiraling out of control.

[kev374]

It doesn’t matter, affordability is what it is. If interest rates rise then prices will come down even more to get in line with affordability so that it creates sufficient demand to sustain the price level.

We really need to INCREASE interest rates ASAP to prevent inflation from spiraling out of control.

[Author]

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