From: me
Sent: Tuesday, April 04, 2006 4:42 PM
To: coworker
Subject: RE: Business Trends
The fed has been raising rates since last summer. For some reason though, the banks haven't raised their rates to correspond.
I believe the fed is raising rates to try cool down the idiotic housing market in some areas. It's not working as well as they hoped, and I think it's going to cause more problems than we know right now.
Being a part time Realtor, I've already seen an increase in the number of foreclosures on the market in OUR area, I can't imagine what it's like where the people in CA and NY bought on interest only loans. Next year will probably be a good year to invest in real estate as it will most likely become a hot buyer market since supply will exceed demand (probably by a large margin). The question is how many will be willing to pay the higher rates.
The economy is hot right now, but investors definitely think there is a cool down pending. - Thus the rush to gold.
Between interest rates increasing and how much of our federal debt is in Chinese hands, something's going to give at some point. Just a matter of when!
I hope it holds out til 2007 so we get a good fall bonus!!
Rates will drop again when the fed thinks it's done enough damage (ie the market goes into recession).
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