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alstry (35.03)

Time for RISING intrest rates???

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May 29, 2008 – Comments (5)

Inflation seemingly out of control.

Fed starting to talk tough.

Market starting to price in a rate increase.

NEW YORK (MarketWatch) -- Fixed mortgage rates rebounded in the past week, according to Bankrate Inc.'s survey released Thursday. The average conforming 30-year fixed mortgage rate rose to 6.20% from 6.02% a week ago, while the average 15-year fixed mortgage increased to 5.80% from 5.63% a week earlier. Adjustable mortgage rates also climbed, with the average 5/1 ARM rising to 5.86% from 5.71% last week.

 

In an already slowing economy burdend  by record debt, what effect will rising rates have on the country?

5 Comments – Post Your Own

#1) On May 29, 2008 at 1:03 PM, thisthatother47 (90.12) wrote:

Bankrate went from 5.85% to 5.95% overnight.  10-year at this clip is going to cause some problems.

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#2) On May 29, 2008 at 1:17 PM, jesusfreakinco (29.12) wrote:

Up another 10 basis points today and 10 year broken through near term support.  Mortgage rates on the elevator up...

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#3) On May 29, 2008 at 1:50 PM, alstry (35.03) wrote:

The problem with interest rates is that debt has been priced for the past few years as if little chance of default.  It was packaged, syndicated, insured and forgotten about.

Now that perspective is changing as defaults are getting larger and larger and migrating into more and more arenas.  Consequently, syndications are slowing, insurance is getting more expensive, and owners are concerned with defaults.

As a result, debt must be priced higher to compensate for the increased risk.  Higher interest rates means lower amounts that can be financed leading to lower values.

This problem is just beginning to perculate.  It came to a head with Bear Stearns and was thought to have passed.  Well....it seems to be rearing its ugly head again......this time I am not sure it will pass so quickly.

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#4) On May 29, 2008 at 2:10 PM, thisthatother47 (90.12) wrote:

Bankrate went from 5.85% to 5.95% overnight.  10-year at this clip is going to cause some problems.

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#5) On May 29, 2008 at 4:02 PM, thisthatother47 (90.12) wrote:

Gaaa - I always laughed at people who hit the refresh button and inadvertantly found the glich that re-posts your comment.  Now I'm one of them.

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