Twin Cities Mortgage RatesMortgage rates Twin Cities
Nevertheless, Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve, told Congressional House and the general public that the Fed was expecting the mortgage market issues to be "well contained". Five per cent compared to this and next year. The second obstacle was the use of the word "r-star" for the topic of his lecture.
He was referring to what economists have long called the "natural interest rate". It is an old economic concept, an concept which, after adjustment for the effects of price increases, credit periods and risks, is based on a normal interest factor at which the long-term availability of the borrowed currency will interact with the long-term interest on it.
The majority of scientists would classify this as 2.5 per cent 3. Zero per cent area. Put in a few points for your price increase and you have shortterm secure credit at 5 to 6 per cent and longer-term secure credit a little higher. Willyamson claims that the new rates he names r-star in the copy of his paper and which appear as r* in scholarly works are much lower, perhaps as low as 0.5 per cent after headline inflation.
With a Fed target for retail price inflation focused at two per cent, this means that very short-term rates, the Fed's reference to the Fed's fund interest rates, would fall to 3 per cent or below. Assuming this is the case, mortgage rates for owner-occupied homes should be well below the post-great rates of the 80s and 90s.
This means that low-cost cash will continue to maintain a share price 60 per cent above pre-debacle level. This means that growers who have paid too much for farmland during the great China-driven commodity supercycle can at least expect sensible interest rates on farm funds and in the event that they have to fund property.
It also means that the yearly return across many asset categories will be low. Yields on investment fund units, as well as those in the 401(k) - 403(b) or Roth account, will be well below what many of us had budgeted in our major earnings years. This means that the high yields taken by state and municipal retirement plans are even more ridiculous out of the real world than we previously thought.
Keep in mind that persistently low interest rates should not push up the price of residential, non-residential or agricultural land. Our development has been from a once steady environment with higher base rates to a new one with low rates. Bernanke puts this down to a number of US and international drivers, among them the "global flood of savings," which Bernanke said was the cause of the go-go mortgage crises that hit millions 12 years ago.
In Europe and elsewhere, unpredictable politics are driving funds into the secure haven of US dollars and US bonds. I recall how the economist raved how the economics of "great moderation" in innovation and steady expansion from 1985 to shortly before the biggest economy hit in 70 years had been caused by economics.
Congressional capacity to administer funds is even poorer than before.