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Interest Rates

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Real Estate Agent with AllMountainRealty.com

Maybe 2 years ago the Fed stopped buying Treasuries. The run up to the stoppage was that interest rates were going to go up. They were going to go up BIG time. Well the Fed stopped and interest rates went down. In fact at a meeting with a gent from the Fed he said they( the Fed) was as surprised as anybody that rates went down.

For those of us who took economics we all learned about supply and demand. Low demand means that the rate of return has to go up to entice buyers. However this truism seems not to have been the case.

The Fed again has been buying securities and I believe they are due to stop in July or August of this year.

Again folks are saying that rates will rise. But will they? Are we undergoing economic changes, not yet fully understood, that effect rates? It will be interesting to see what happens . What do you all think?

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Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog

On line at www.allmountainrealty.com Call at 706 579 1098

We sell Homes                                                    

 

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John Saari
Worcester, MA
"The Mortgage Buddy"

You are correct Charlie the end of June the treasury buying is supossed to stop, but I think they will extend the program or come up with something else to keep the rates low.

Jun 14, 2011 09:38 AM
Donnie McKinney
Purchase Realty Group - Paducah, KY
Donnie McKinney CCIM, Purchase Realty Group

Can you imagine what the daily interest cost would be on $17 TRILLION in debt? Don't expect the Fed to allow interest rates to go up ;)

Jun 14, 2011 10:06 AM
Joe Kenny
Realty Executive Midwest - Darien, IL
Better Than Your Average Joe

Charlie, my crystal ball has been in the shop for quite some time but it seems to me that some of this needs to correct itself no matter how it will hurt later.  Just my 1 cent ( it used to be 2 cents but well you know the rest.

Jun 14, 2011 10:21 AM
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

As to your question, there are 2 sides to the equation; 1. the fed could step in and buy up all the 10yr T's to keep rates low and further manipulate the market. If not the long end of the curve gets real steep. 2. The fed's balance sheet is currently at $2 Trillion +, How are they going to shrink the balance sheet when the majority consists of T's and worthless mbs. The Maiden Lane Sale of AIG crap didn't go well.(only 1/3 of the junk sold)

No matter what the fed does or doesn't do, this whole deal won't end well. The taxpayer takes it in the kiester again. I'd just like to get a kiss once in a while before we bend over.

Jun 14, 2011 05:14 PM
Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Thanks all for your comments. there are a lot of different views on this issue and I appreciate you all stopping by and taking the time out to comment

Jun 15, 2011 04:47 AM
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