Will interest rates ever rise?

Also, how would US be able to borrow money with higher interest rates?

Only when the 99% has been depleted of all Savings.

Interest rates will go up when the economy gets better. Higher interest rates will not push down home prices. It is more likely that people will start buying houses when they look like a good investment again, and that means that their prices have to be increasing. People also have to have incomes and jobs to be able to qualify for a loan, so the economy will have to have grown quite a bit for that to happen.

The US will be able to continue to borrow money when interest rates rise because tax revenues will increase substantially (tax revenues are directly tied to economic output). That's also why cutting the deficit too sharply would be self-defeating--revenues would drop disproportionally to cuts and interest rates.

us treasury yield curve is upwardly sloping, so yes?

Also, I would recommend waiting until at least February to buy a house. Spain and Italy have big bond auctions at the end of the month. If they don't go smoothly, they will likely default on their debts and the Eurozone could breakup, causing a severe economic contraction across the world. US banks are well capitalized and the system will make it out if that happens, but a major bank could fall (they're not to big to fail right now) and we would see unemployment rise a good bit after that.

TCB wrote:

Interest rates will go up when the economy gets better. Higher interest rates will not push down home prices. It is more likely that people will start buying houses when they look like a good investment again, and that means that their prices have to be increasing. People also have to have incomes and jobs to be able to qualify for a loan, so the economy will have to have grown quite a bit for that to happen.

The US will be able to continue to borrow money when interest rates rise because tax revenues will increase substantially (tax revenues are directly tied to economic output). That's also why cutting the deficit too sharply would be self-defeating--revenues would drop disproportionally to cuts and interest rates.

So interest rates will only go up when economy improves?

So, I guess if that's the case, housing prices should be going up at that time with interest rates going up.

So, it's going to be several several more years until when interest rates go up.

US int rates don't rise bc Obama keeps borrowing $T increasing the deficit watering down the value of the dollar. Japan int rates don't rise bc Bank of Japan keeps merging down natl-prefectural-city depts, has dollar stores now that cuts off 3 levels of middle profits, Japan bank won't rake in Chi Tai Kor banks bc strategic natl policy for Asia.

RunninginCircle wrote:

Also, how would US be able to borrow money with higher interest rates?

The federal reserve would buy bonds from the us treasury until the amount needed to borrow was met

Bankers Box wrote:

US int rates don't rise bc Obama keeps borrowing $T increasing the deficit watering down the value of the dollar. Japan int rates don't rise bc Bank of Japan keeps merging down natl-prefectural-city depts, has dollar stores now that cuts off 3 levels of middle profits, Japan bank won't rake in Chi Tai Kor banks bc strategic natl policy for Asia.

Haha. You know nothing about macroeconomics. Seriously, zero.

Oversupply of dollars artificially keeps interest rates down at the expense of future generations. Obama keeps borrowing to enhance his prospects of re-election.

Japan keeps the lid on East Asian banks to ward off Clinton-era Japan bashers.

RunninginCircle wrote:

So interest rates will only go up when economy improves?

So, I guess if that's the case, housing prices should be going up at that time with interest rates going up.

So, it's going to be several several more years until when interest rates go up.

Yes, interest rates will only rise when the economy improves.

Yes, interest rates will rise as the demand for home loans increases.

It is entirely possible that economic growth in the US could accelerate while Europe falls back into recession and emerging economies slow down (this is what it looks like is happening right now at least). If the trend continues, commodity prices could fall, pushing inflation down. If that happens, then the Fed would allow interest rates to remain low for a few more years. But if inflation creeps up above ~4% and GDP breaks ~3.5%, the Fed will act to increase interest rates...probably.

Do you think the only way the US economy will improve is with the housing prices?

OP Dude, NOW is the best time to buy a house. The interest rates are crazy once in a lifetime low, housing is available at near 1970s price levels and a BARRAGE of foreclosures will be hitting the market this spring and summer.

The large banks that were holding back these foreclosures to try and prop up prices are now executing them and it will be the last group of foreclosures that can be bought at ridiculously low prices. After this group is gone, foreclosure levels will be drastically decreasing.

Unless gas prices go back to above $4 a gallon, the stronger economy will loosen the lending availability a little though FHA loans have been fairly easy to get the last couple years.

I am selling houses for 20% less than I would have 4 years ago. Of course, I am buying them so much cheaper, I make about the same on each house I remodel. If you want to buy a house to live in, THIS is the time.

bump

RunninginCircle wrote:

Do you think the only way the US economy will improve is with the housing prices?

The housing market has yet to even begin to improve and the US economy has been improving for a while now. Growth has been held down by Europe and the only reason we're seeing growth happen now is because there has been a lot of pressure from technology and people who kept their jobs but held off on new purchases (for cars, electronics and such) due to fear of getting fired can't wait any longer (or feel more comfortable now).

If housing starts to recover, investors who have been waiting for it to rebound will jump into the market. If Europe doesn't fall apart, then you could see a big jump in housing prices in the next few months and the economy would get a nice boost from that. However, the economy will continue to grow even if housing does not improve.

Rates will never go up until after the dollar collapses.

I don't see interest rates ever rising a lot in this era we are in. Unless something very fundamental changes. Mortgage rates will only go up if there is a threat of runaway inflation. But the problem is that there are massive deflationary forces in our economy that show no signs of going away. Namely people aren't spending because they don't have money leaving gluts in supply. All the huge deficit spending and radical fed policies has only served to get us back to the moderate inflation we had lived under before. My amateur forecast for the forseeable future is that I don't see housing prices shooting back up. They may drift down even despite low interest rates but that is a very risky bet on. At a certain low price business will just buy old foreclosed houses, level them, and build apartments. Its probably best that you take the old fashioned approach to home buying. Look at a location that you want put roots down and invest your time and energy in building a vibrant neighborhood. In the end that is the best investment in terms of balancing risk and reward.

RunninginCircle wrote:

I want to be a first time home buyer, but I want to wait until interest rates go up since that should push down the demand more and lower the home prices. However, is interest rates ever going to rise? I mean, there's no way the Fed would want housing prices to drop or slow down the economy so is it ever going to rise up? Everyone keeps saying that interest rates will go up, but is it really going to go up?

How long has Japan's interest rates remained low since their housing bubble burst?

The US real estate bubble has burst. Housing prices will likely never rise appreciably again in our lifetime. Treat your home purchase like the electric bill you pay. A home is something necessary but it is not something you can rely on for future growth.

If more foreclosed homes are hitting the market, wouldn't that drive the prices even lower? Just from looking at supply and demand.

If more investors buy those foreclosed homes, wouldn't there be more houses to rent?

I did hear on the news about letting investors buy number of houses at once and turning them into rentals. I first thought that'll be good as a renter as it will give me more choices and hopefully drive the rents down, but then I thought, if few companies are owning bunch of these homes, they'll get to set the price on these rents which could ultimately drive the rents up.