Thu
Sep 22 2022
10:02 am

"Federal Reserve officials, struggling to contain the most rapid inflation in 40 years, delivered a third big rate increase on Wednesday and projected a more aggressive path ahead for monetary policy, one that would lift interest rates higher and keep them elevated longer."

"The Fed raised its policy interest rate by three-quarters of a percentage point, boosting it to a range of 3 to 3.25 percent. That’s a significant jump from as recently as March, when the federal funds rate was set at near-zero..."

FedRates_20220922.jpg

Starting with Fourth quarter, 1954.
Ending with Second quarter, 2022.

Fed rates are still very low.

Mortgage rates are up to 6%. Those who obtained mortgages between 2012 (3.92%) and early 2022 (3.45%) were lucky. Those trying to obtain mortgages now may be in shock. Just think, though, in 1982 mortgage rates were over 17%, in the late 80s the rates dropped to 9%, and in the 2000’s rates were from 5% to 8%. Higher mortgage rates do appear to slow down home buying.

Auto loan rates do not appear to have not fluctuated as much as home loans.

MtgRates_20220922.jpg

Starting with February, 1972.
Ending with May, 2022.

Savings and CD rates are oh so very low. If they went down any more you would be paying the financial institutions to store your money. In July 2022 a 6 month CD savings rate was 0.29%, in 11/2009 the rate was 0.51%, in 5/1989 the rate was 9%. Savings and CD rates are not climbing as quickly as mortgage rates. Think, though, if rates go back down in the near future a financial institution will be happy to get stuck with a 30 year 6% loan but they will not be happy getting stuck with a 5 year 6% CD savings rate.

fischbobber's picture

Ya know....

Seems like yesterday that I was sitting in class being taught why an interest rate of 5-7% and unemployment rate of 5-6% was a primary indicator of a healthy economy. Now I'm old and retired, and as I look back at that, I realize why that is correct. Adjusting equilibrium to an economy our size is a massive undertaking, that will hurt those unprepared. That's why all those Paul Volker posters used to hanng in stockbrokers offices.

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