11.14.11 (Part 2) Real Estate Radio With Louis Cammarosano

Ryan notes that the economic releases have been secondary to economic events in Europe. Ryan notes that mortgage rates have held steady and predicts that it will remain so till the rest of the year. Louis agrees and notes that Italy has had a debt problem for a while but that it has just dawned on investors. Louis also notes that the US has a debt problem but no one is focused on it as they are focused on European problems and therefore conclude that the US is a safe haven. Nial Ferguson was recently a guest on the Peter Schiff show and noted that markets are myopic and tend to ignore fundamentals for a while. Louis notes that at some point investors will focus on the fact that the US owes over $14 trillion and won't be able to pay it back. Once investors focus on that fact interest rates will rise. Ryan notes that the Fed's manipulation of interest rates is inflationary and notes the rise in the prices of gas and food. Ryan advises locking into a low long term interest rate. Louis notes that locking in a long term interest rate may be a wise move even if the value of the home drops as during the term of the loan, rental costs and interest rates will most likely rise, while a fixed interest rate will remain the same. Louis notes that just because interest rates are low doesn't mean the US should borrow more just because it can as it already owes $14 trillion. Louis notes that if there is significant inflation, you want to be paying back your mortgage with today's dollars at today's low rates. Louis and Ryan note that rates are more likely to rise than fall. Louis notes that consumers are lured into a false sense of security re low interest rates as they believe that the Fed can keep rates low as promised through 2013. This scenario takes away the need to lock in now as consumers are still expecting rates to remain low. Louis notes, however that if the Congressional "super committee" does not reach an agreement, rates could rise.

Category:

News & Politics

Tags:

• European debt crisis
• nial ferguson
• peter schiff
• schiff radio
• US debt
• federal reserve
• austrian economics
• inflation
• ascent of money
• home prices
• interest rates
• congress
• super committee
• Louis
• cammarosano