Fed raises rates

I am pro-low rates but a 0.25 raise is not terrible.  Inflation is still non-existent and lending is still slow.  We shall see what happens.
 
Effect on 30yr mortgage rates should be close to 0. ARMs should start to see rate increases if the Fed continues to raise rates.
 
As said, low inflation should lead to low rate increase.

ARMs and anyone borrowing against equity should see a bump.

Also interested if new house prices will see some change especially if rates are expected to be raised again next year.
 
There is a report that Fed tells banks get ready for negative rates scenario. This is a part of the stress test for banks.
 
Like in Japan where they'll charge you interest on your balance.  Yikes.
 
But let's hope there's going to be a  negative rate 30 year fixed rate mortgage. :)
 
Scary to think about. I suppose negative rates will encourage people to spend more and thus try to stir / create inflation but shit, I just don't like that idea. 
 
It will encourage me to take my cash out (which I got from my downsizing) to avoid paying the bank to show I have it on paper.

I'm sure they'll decide to not charge a fee if they see a run on the banks.
 
eyephone said:
There is a report that Fed tells banks get ready for negative rates scenario. This is a part of the stress test for banks.

Today, Yellen confirms negative interest rates to Congress.
 
Ready2Downsize said:
It will encourage me to take my cash out (which I got from my downsizing) to avoid paying the bank to show I have it on paper.

I'm sure they'll decide to not charge a fee if they see a run on the banks.

And do what with it? Put it under your mattress? And if you do anything other than that then they were successful in getting you to spend your money.
 
qwerty said:
Ready2Downsize said:
It will encourage me to take my cash out (which I got from my downsizing) to avoid paying the bank to show I have it on paper.

I'm sure they'll decide to not charge a fee if they see a run on the banks.

And do what with it? Put it under your mattress? And if you do anything other than that then they were successful in getting you to spend your money.

Offshore bank account? Bank it in Mexico? Canada? Switzerland? Cayman Islands?
 
So the benefit of negative rates would be boosting spending.

Downside is making people save less that will increase the risk of default, that and more robberies (hoarding cash).
Buy stocks in guns (already shot up ~pun) and safe manufacturer.
 
Bullsback said:
Scary to think about. I suppose negative rates will encourage people to spend more and thus try to stir / create inflation but shit, I just don't like that idea.

Inflation robs the savings of the elderly.  A lot of the kids these days are more open to inflation because it will probably benefit them more than it hurts them. The older people get, the less welcome they should be to inflation.
 
No, I think the fed's job isn't necessarily to do long-term manipulation of rates, etc. The whole point of QE was to provide medicine before the congress could enact real legislation to solve some of our woes. Instead, all we've had is 6+ years of congress doing nothing. Nobody willing to reach across the aisle, even when things legitimately make sense and both parties agree, they still won't do anything.

It is beyond pathetic. 

PS: What can the fed do when the rest of the world is in utter chaos. The hardest part of all of this is, we are a global economy and while the US economy is actually on pretty good footing and supportive of rate increases, the reality is, the rest of the world's central banks don't work with / talk with the US and thus we are going to be in this tough spot where it will be very difficult to raise rates given when it is going on in Europe and Japan.  It will ultimately drive significant volatility in rates and also continue to drive increased equity volatility as well (if not worse equity volatility). 
 
irvinehomeowner said:
So in simpleton's (my) terms, what does this mean?

Are mortgage rates going rise like many have been predicting since 2008?
Nothing would indicate any drastic move in mortgage rates in the next 1 to 2 years. I say "drastic", they certainly could move 50-75 basis points (with a higher range on the upside than the downside) but in general, I would be stunned to see rates above say 4.25 a year or two years from now. Economic conditions wouldn't seem to allow it.

In my most layman terms, how could you justify US Treasury rates and ultimately bank lending rates in the US to be significantly higher then the rest of the world. For example, if we raise rates, all that will do is further increase demand for actual US Treasuries, thus pushing down our treasuries even lower (this is what will drive volatility as fed clearly would like to raise rates). If you were in Europe or Japan, would you rather borrow at negative interest or buy US treasuries with some return (and I'd also argue a hell of a lot more safety)? 

Fed has also been wrong on the downside of its economic growth assumptions every year since 09 I believe.  Its normal to be wrong, but it is not normal to be wrong that often the same way. 
 
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