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re: It's Official - The Federal Reserve Raises Rate 1/4 Point (Discussion Thread)
Posted on 12/17/15 at 6:08 am to Shankopotomus
Posted on 12/17/15 at 6:08 am to Shankopotomus
So the sky didn't fall? The world kept spinning?
No shite?
No shite?
1
Posted on 12/17/15 at 6:53 am to Lsut81
A buddy of mine has been talking for months about the fallout that was going to happen when the rates went up. I kept saying that the fact that everyone was talking about it for months made it pretty clear that most if not all of the effect was priced in. He refused to believe otherwise.
Posted on 12/17/15 at 8:17 am to Spirit of Dunson
quote:
the fallout that was going to happen when the rates went up.
Since nobody really knew how much the rates would increase, then I can understand his thoughts on this. If the FED announced a 1 point increase, I think there could have been more "fallout".
Posted on 12/17/15 at 8:21 am to stevengtiger
quote:The FOMC has been saying for almost a year that when it started to increase rates it was going to be 0.25% at a time and the increases would be gradual.
Since nobody really knew how much the rates would increase,
Posted on 12/17/15 at 8:26 am to LSURussian
quote:
the increases would be gradual.
Again, but nobody knows how gradual. If the rates increase 1 point over the course of 6 months, I think it would effect the real estate markets considerbly unless they make it easier for people to get loans.
Money has never been cheaper yet the rate of people moving to renting has never been higher. Increasing the rates without changing loan requirements will have an impact.
Posted on 12/17/15 at 8:29 am to stevengtiger
I would think the Federal Reserve would understand how the path of their increases would effect the economy more so than most.
Don't fight the Fed. That's the number 1 rule.
Don't fight the Fed. That's the number 1 rule.
Posted on 12/17/15 at 8:35 am to Shepherd88
quote:
I would think the Federal Reserve would understand how the path of their increases would effect the economy more so than most.
I agree with you but that didn't stop QE from taking place and artificially inflating our market since 2009. I don't have the smarts to understand all that the Federal Reserve does (I doubt many do) but that does not make them perfect.
This post was edited on 12/17/15 at 8:36 am
Posted on 12/17/15 at 8:40 am to stevengtiger
I'm not getting in that discussion again as its been beating a dead horse on here but the Fed did not inflate the market artificially.
No one said they were perfect but they've done their job since its creation and haven't steered the economy wrong as of yet.
And if they one day do steer us wrong and this empire collapses then your money ain't gone mean shite anyway.
No one said they were perfect but they've done their job since its creation and haven't steered the economy wrong as of yet.
And if they one day do steer us wrong and this empire collapses then your money ain't gone mean shite anyway.
Posted on 12/17/15 at 8:50 am to stevengtiger
quote:Won't happen. Probably won't happen over the next year.
If the rates increase 1 point over the course of 6 months,
quote:Some of the best times for real estate occurred when interest rates were north of 8%.
I think it would effect the real estate markets considerbly unless they make it easier for people to get loans.
quote:The lower rate of home ownership vs. renting has nothing to do with interest rates.
Money has never been cheaper yet the rate of people moving to renting has never been higher.
Home ownership was made much more difficult for young couples after the 2008/2009 real estate collapse. Previous to that time period (and part of the reason it happened) is that obtaining home mortgage loans was made too easy by lenders.
The pendulum has swung back in the other direction with more strict requirements to borrow and frankly it is healthier in the long run that it has.
Posted on 12/17/15 at 8:55 am to LSURussian
quote:
The lower rate of home ownership vs. renting has nothing to do with interest rates.
I just disagree with this. If interest rates are high and loans are hard to get, more people will have to rent.
quote:
The pendulum has swung back in the other direction with more strict requirements to borrow and frankly it is healthier in the long run that it has.
Right and I agree it is healthier long term but swinging back this way, in a poor economy, more people will be forced to rent.
Posted on 12/17/15 at 9:05 am to stevengtiger
quote:You're missing the point.
I just disagree with this. If interest rates are high and loans are hard to get, more people will have to rent.
Over the past several years, home mortgage rates have been lower than they've been in over 40 years yet the home ownership rate has declined to its lowest % since the 1990's.
So whether you disagree or not, it's an empirical fact that interest rates have not contributed to the currently low home ownership percentage. The contributing factor has been the stricter borrowing requirements by lenders as a result of the financial crisis of 6 years ago.
quote:If the Fed evaluates the economy as being "poor" it won't increase rates.
but swinging back this way, in a poor economy, more people will be forced to rent.
Posted on 12/17/15 at 9:12 am to LSURussian
quote:
it's an empirical fact that interest rates have not contributed to the currently low home ownership percentage. The contributing factor has been the stricter borrowing requirements by lenders as a result of the financial crisis of 6 years ago.
I understand that. I guess my point is, if they raise the rates and keep loans tough to get, this will impact the real estate market more than it already has and home ownership numbers will continue to fall.
quote:
If the Fed evaluates the economy as being "poor" it won't increase rates.
Average wages down in middle class and highest number of unemployment in the last 30 years. The economy may look good to the Fed but for average people wanting to buy a home, it is not.
ETA: Not trying to argue about this. I am fairly simple minded with this stuff and trying to learn as much as I can.
This post was edited on 12/17/15 at 9:14 am
Posted on 12/17/15 at 9:33 am to LSURussian
quote:
The contributing factor has been the stricter borrowing requirements by lenders as a result of the financial crisis of 6 years ago.
I'm not buying this. You should see who lenders are allowing to borrow. They don't do alt-a or negative amortization mortgages but that does not mean they are lending to borrowers with no income. I also think home ownership is down because of rising student debt.
Posted on 12/17/15 at 9:40 am to Shankopotomus
What are peoples opinion on the rate increase and amount of annual interest expense on 18T in debt. 25bp on 18T is 45B increase in interest expense in theory.
Posted on 12/17/15 at 9:51 am to wutangfinancial
quote:It doesn't matter if you buy it or not. Getting a home mortgage loan today is more difficult than it was 6 or 7 years ago. That's a fact, not an opinion.
I'm not buying this.
Despite Recovery, Many Find Home Loans Still Hard To Get
Why It’s So Hard To Get A Mortgage According To A Loan Officer
Is It Hard To Get A Mortgage Nowadays?
quote:I think your wording is missing something in that phrase. As it's stated, you confirm my point.
but that does not mean they are lending to borrowers with no income.
Posted on 12/17/15 at 9:59 am to CHSBears
quote:Interest rates on U.S. debt does not correlate with overnight rates banks charge each other for loans, which is what the .25% increase for fed funds is for.
What are peoples opinion on the rate increase and amount of annual interest expense on 18T in debt. 25bp on 18T is 45B increase in interest expense in theory.
Of course, if rates rise in general then debt costs for the government will increase. But the increase in rates will not directly correlate to the feds funds rate.
Posted on 12/17/15 at 10:09 am to LSURussian
I work at a lender. I see it everyday. But keep telling yourself you're right 
Edit to that last post: DOES NOT mean they ARE NOT lending to borrowers with no income
Edit to that last post: DOES NOT mean they ARE NOT lending to borrowers with no income
Posted on 12/17/15 at 10:27 am to wutangfinancial
LSURussian vs. Wutang on financial matters. This should be good.
Posted on 12/17/15 at 10:57 am to wutangfinancial
quote:And you're saying your company is making loans using the same underwriting standards as it did prior to the financial crisis?
I work at a lender.
If yes, please tell me the name of your company so I can short its stock. Thanks.
Posted on 12/17/15 at 10:59 am to LSURussian
Didn't almost every bank raise their prime rate yesterday?
I understand that not all mortgages are prime +, but come on. It seems a little naive to believe rates of one don't effect the other.
Also, not one increased their deposit rate.
I understand that not all mortgages are prime +, but come on. It seems a little naive to believe rates of one don't effect the other.
Also, not one increased their deposit rate.
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