Home
Articles
Photos
Interviews
Forums
New posts
Search forums
Georgia Tech Recruiting
Dashboard
What's new
New posts
New profile posts
Latest activity
Chat
Log in
Register
What's new
Search
Search
Search titles only
By:
New posts
Search forums
Menu
Log in
Register
Install the app
Install
Home
Forums
General Topics
The Swarm Lounge
Financial Markets
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="TechnicalPossum" data-source="post: 170066" data-attributes="member: 1648"><p>I'm not a financial planner by any means, but I wouldn't think it would. It would likely bump the rates up on home mortgages and other lending to include the yield rate on municipal bonds. But, it shouldn't to an extent that home sales are screwed down on too hard. </p><p></p><p>For example, figure if the prime interest rate was raised 1/4% then the rate for a homeowner may go up 1/2%. This equates to $30 per month per $100k borrowed or so increase on a 30 year mortgage based on current interest rates (4% to 6%). Some people may get squeezed or have to buy smaller houses, but logically I cannot see how it would be catastrophic to homeowners unless you have an adjustable rate mortgage and are severely over leveraged. </p><p></p><p>The second part is that if money becomes more expensive (higher interest rates), borrowers are more cautious in what they borrow money for due to cost of borrowing. The theory is that this causes a slow down of the economy since businesses will not expand/retool/hire more due to this increase in cost of capital. The part that is discussed less is what happens to debt laden businesses who borrowed heavily to expand during a period of low interest rates when the market goes through the standard cycles of recession/correction. For my opinion, it will make the peaks higher, but will make the recessions more painful.</p></blockquote><p></p>
[QUOTE="TechnicalPossum, post: 170066, member: 1648"] I'm not a financial planner by any means, but I wouldn't think it would. It would likely bump the rates up on home mortgages and other lending to include the yield rate on municipal bonds. But, it shouldn't to an extent that home sales are screwed down on too hard. For example, figure if the prime interest rate was raised 1/4% then the rate for a homeowner may go up 1/2%. This equates to $30 per month per $100k borrowed or so increase on a 30 year mortgage based on current interest rates (4% to 6%). Some people may get squeezed or have to buy smaller houses, but logically I cannot see how it would be catastrophic to homeowners unless you have an adjustable rate mortgage and are severely over leveraged. The second part is that if money becomes more expensive (higher interest rates), borrowers are more cautious in what they borrow money for due to cost of borrowing. The theory is that this causes a slow down of the economy since businesses will not expand/retool/hire more due to this increase in cost of capital. The part that is discussed less is what happens to debt laden businesses who borrowed heavily to expand during a period of low interest rates when the market goes through the standard cycles of recession/correction. For my opinion, it will make the peaks higher, but will make the recessions more painful. [/QUOTE]
Insert quotes…
Verification
Who won the ACC Coach of the Year Award in 2014?
Post reply
Home
Forums
General Topics
The Swarm Lounge
Financial Markets
This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.
Accept
Learn more…
Top