
Heads Up for my Valued Clients,
Interest rates are set in two primary ways. With the Fed meeting today and tomorrow, remember that short term rates (credit cards, ARM’s, HELOC’s) are highly influenced by the Federal Reserve. And the Fed keeps a close eye on inflation: if the Fed fears that prices are rising too fast, it will raise rates to slow the economy. But longer term rates, like 30-yr mortgages, are set in the open market. They are partly a bet on how well the Fed will control inflation but also reflect supply and demand. Basically, if there are lots of people with money to lend, and not so many who want to (or are able to) borrow it, rates go down. Rising commodity prices, however, are complicating the Fed’s job – it cost me $40 to fill up my car yesterday on my way to buy rice!
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Cheers,
Mark
Your Silicon Valley & Sunnyvale Real Estate Professional
Mark ThomasonRE/MAX Real Estate Services
408.850.3085