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For the financial experts...interest rates and long term projections.

Discussion in 'The Water Cooler' started by MGH_PA, Nov 14, 2013.

  1. MGH_PA

    MGH_PA Moderator

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    This has quite a bit of relevance for my wife and I and how we proceed in the next 3-4 years. We want (actually need) to be out of this house and into something larger (hopefully custom built) within that time frame (when we expect to have or close to having two children). Right now, it's still somewhat a buyers market, but interest rates have crept back to where they were for us in 2009 when we bought the place. Just as an outsider with little to no financial expertise to back this belief, I feel that we will see interest rates climb further in that time frame. How much? I have no idea. However, coming up even just 1 or 2% can make a huge difference in our choices and options.

    So, for those in the "know," or even armchair financial analysts, chime in here. What do you expect interest rates to do in the next 3 to 4 years?
     
  2. John Galt

    John Galt Die Hard Bowhunter

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    The economy will have to make substantial gains before interest rates are going any where.The middle class has had its azz handed to it since about the year 2000, and since then a large portion of the baby boomers whom by the way saved money have passed on and so has their cash, Troubled times await us if we do not get people back to work at jobs that pay enough to save and buy homes, that has not happened in a long time.
    Young people do not see the reason for smart planning, many are still paying for the looses that the housing bubble dealt out and with poor credit ratings and loads of debt their future is not bright.
    This country is finding it self closer and closer to a turning point, and that should scare many of you.
     
  3. frenchbritt123

    frenchbritt123 Grizzled Veteran

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    I am not sure where they will go.

    I feel that with the amount of world debt, it is to the benefit of most countries to keep interest rates as low as possible. If you start to see developed countries (somewhat equal with us) raising their interest rates I believe we would soon follow.
     
  4. John Galt

    John Galt Die Hard Bowhunter

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    Who would that be? They all have out spent their GDP many times over, all raising their interest rates do is increase their debt payments taking even more money out of the hands of consumers.
    We as Americans can see this every day with our trade deficit spending sending untold trillions off shore to be invested in third world countries with huge returns and little taxable liabilities in America.
    Few Americans understand that the returns they think they getting on their 401 accounts are actually, busting them in their every day lives, as the returns are coming from the off shoring of American jobs that your neighbor used to have, and by the time those" paper returns" disappear, like they always do, it will be to late.
    And as these good paying jobs leave we beouch about the number of people on the government dole, hellooooo.
     
    Last edited: Nov 14, 2013
  5. Woody9220

    Woody9220 Weekend Warrior

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    I strongly disagree with your last statement about young people. I'm 26 and fully understand why I need to save as do many others my age. Our problem is being buried in debt before we even get into the ''real world.'' We are pushed to go to college and get an education, but after graduation most can't find a job that even pays their student loans.

    Sent from my HTC VLE_U using Tapatalk 2
     
  6. John Galt

    John Galt Die Hard Bowhunter

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    I'm not blaming you, I'm blaming what you're taught, you buy new cars, terrible investment, you buy insurance, another terrible investment, you buy the homes "you love", buy a duplex you hate but makes you money, buy land, you can play on it your whole life, not paper investments that disappear with startling frequency, and the 20 grand your sweetems just had to spend on her "special day", could have bought you into another investment property that would create a special life time!
    Life is longer than some of you think, plan it that way!
     
  7. nchunter

    nchunter Weekend Warrior

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    Ok heres my official armchair economist prediction. Mortgage rates have been artificially held down by "operation twist" which is essentially buying US t-bills at low rates. The fed funds rate operates independently of these long term rates. So, my prediction is, Fed leave nominal rates low which is essentially what bank borrow at. Longer term rates rise as they wind down twist. Therefore you the consumer will pay more to borrow and banks pay little to nothing to borrow so "the spread" is in their favor. Thus making them more money. In rising rate environments the bank spread is almost always fixed, however, the fed has shown a willingness to help banks more then consumers. If they wanted to help consumers, they simply would have lent directly through fannie and freddie to consumers directly and given you the ultra low rates. Instead they let the banks be the middle man to make money on the servicing and origination. Most loans originated over the past 4-5 years were simply dumped back to the fed after the banks got their cut.
    I do agree that the days of massively high interest rates may be gone because of the amount of government borrowing. It would not be in the Feds interest to punish the Treasury.
     
  8. TEmbry

    TEmbry Grizzled Veteran

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    I know little about it but I see them doing nothing but going up if anywhere....this is why last year I locked in a refinanced mortgage on some properties under my dad to the tune of $150k and wiped clean my government student loans. 4% is much cheaper than 7.9%.
     
  9. trial153

    trial153 Grizzled Veteran

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    NC nailed it, rates have no place to go but up. With the fed not forecasting any more quantitative easing, and corporations holding record cash reserves the writing is on the wall for a rise in the 10 year T note. If the fed isn't buying them someone has to...and what would make them more palatable but a rise in rates? Mortgage rates will follow our 10T note like the aways have.
     
  10. SPOTnSTALK

    SPOTnSTALK Grizzled Veteran

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    I expect rates to rise but slowly. I agree with most of the above although in your personal decision making process you really need an unsponsored, non bias, market analysis for clarity. That much time down the road is hard to accurately estimate. Historical lows and highs offer a semi predictable up tick in the days ahead but world markets are still not running at full tilt. Today the Dow was up. That is a good sign to a slow recovery but as stated, we need sustainable jobs to balance the economy. .. my two cents.
     
  11. SPOTnSTALK

    SPOTnSTALK Grizzled Veteran

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    Woody,
    There is more to this, think bra-
     
  12. MGH_PA

    MGH_PA Moderator

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    I know a lot of it is purely unknown. I was told back in 2009 when I locked in at 4.75% that rates would never be that low again:D

    I just worry that they would go to 6-7%+ by the time we want to build/buy. Right now we're still looking for land or a home with some land, and while neither of those things have come to fruition right now, if interest rates would spike it would severely limit our purchasing options.
     
  13. Hooker

    Hooker Grizzled Veteran

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    I just know that I'm happy with my 3.25%.
     
  14. MGH_PA

    MGH_PA Moderator

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    I could have refinanced at that rate, but it didn't make sense in the short term from where we're at (4.75% was on a 20yr loan). I will have this current house paid off by the time I'm 38 if I wanted to stay here, but I don't.
     
  15. Hooker

    Hooker Grizzled Veteran

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    With my rate, I will never sell this house. It will make it hard to move if we do outgrow it, or just decide it's time to move. But I will still keep it and rent it.

    3.25% is almost free money.

    Luckily it is big enough, and in the location that we want, so if we do decide to stay here, we could have it paid off and be debt free around 40.
     
  16. John Galt

    John Galt Die Hard Bowhunter

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    With money cheap and prices low, I see no up side to being "debt free", instead I would be looking at these times as an opportunity to increase my investments.

    The less than 3% return on your cash money is less than inflation and you are actually going backwards, high interest debt is always bad, low interest debt usually is not. is it really debt if its paying returns?
     
  17. MGH_PA

    MGH_PA Moderator

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    I'm trying:D
     
  18. Hooker

    Hooker Grizzled Veteran

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    I agree.

    I'm still 11 years away from 40.
     
  19. SPOTnSTALK

    SPOTnSTALK Grizzled Veteran

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    Timing is everything but only a fool attempts to time the markets. Rates will increase but being comfortable in your investments now or later makes a less stressed happy bow hunter. You can not rope the wind and ya never Really own it anyway. .. Over reaching causes falls.
     
  20. fletch920

    fletch920 Grizzled Veteran

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    I refinanced two farms into one note at 4.5%. They now cash flow with a very small percentage of ground being tillable. The deer dont seem to notice.
     

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