Interest Rates Stay Low

Economists expected interest rates to rise dramatically in 2010.

It hasn’t happened. They’ve stayed at record-low levels.

The federal government has a huge deficit. Why isn’t this demand for funding driving up interest rates?

How will this affect the housing market?

Karen Triggiani sends me along this article in the NYT:

That interest rates have declined is good news in many respects. “There are,” said Sal Guatieri, senior economist at BMO Capital Markets, “always people who have jobs who can take full advantage of lower interest rates to borrow and spend.”

But that impact now may be weakened by two factors, perhaps increasing the need for fiscal stimulus.

First, there are many who will not be helped. Homeowners with ample equity and income can refinance their mortgages at record low rates, which fell to 4.4 percent last week. But millions of homeowners either lack sufficient income or have houses no longer worth what is owed on the mortgage. They cannot refinance.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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