Interest Rates on the Rise.

Real Estate Agent with Florida's Realty LLC

Per Bankrate, the interest rates for home loans are increasing as a direct result of the ongoing debt crisis talks going on in Washington.  Less important is the need to raise the debt one really thinks we are going to default on our debt payments in spite of all the comments intended to scare the public and motivate political rivals. 

"Mortgage rates inched up this week as investors were worried by political gridlock over how to raise the national debt ceiling and cut the deficit. Industry analysts have made it clear that if the United States defaults and the national debt is downgraded, mortgage rates could spike immediately. But the uncertainty over what Congress will decide over the next few days has already started to shake the mortgage world, as investors question if it’s still safe to invest in U.S. bonds"

Regardless of what happens with the debt ceiling most analyists agree it is a foregone conclusion that our credit rating will be lowered from the AAA status we now enjoy.  This is more detrimental to cosumers and homebuyers as it will cost us more to borrow.  This is a direct reflection on our governments inability to rein in our debt.  Most economists agree that with no movement on tackling our debt, the US will lose the confidence of investors.  Once that happens, it will costs banks more to borrow money and that "benefit" will be passed on to us, the consumers in the form of higher interest rates and inflation.


Posted by

Sandi Davidson, Realtor®

Florida's Realty LLC

(239) 674-7307

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Comments (2)

Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Sandi - Yep, that's how it works. But we're also going to see inflationary pressure as we print more money we don't have, and that's going to drive up interest rates as well. Anybody who can lock in their borrowing now ought to get on it, because the game has changed.

Aug 01, 2011 06:43 AM
Sandi Davidson
Florida's Realty LLC - Lehigh Acres, FL

Dick, absolutely right on inflation, didn't I mention that?  On the flipside, an even weaker dollar may incent manufacturing to return to the US, as costs may become more attractive, especially with the ever escalating increase in oil prices and resulting shipping costs.  Other countries may indeed find a benefit to manufacturing here as well as a result.  Of course, it will take several years for us to build back a manufacturing base, and train unskilled workers. 

Aug 01, 2011 06:48 AM