Consumer credit rates
Extra costs due to your interest rates rising will stretch consumers and those with bad credit will suffer the most! We all have benefited from a booming economy with low interest rates and rising property values, but this could bring a rude awakening for the unprepared.The combination of high gas prices, higher energy costs, interest rates on the upswing and troubling levels of debt and credit use could spell catastrophe for many. If you have debts, you need to get them under control right away. Credit spending has become a bad habit for everyone. It’s easy to fall behind on payments and get into big trouble especially when you mix in unexpected personal problems. If you have credit card debt or significant balances on your lines of credits then I urge you to consolidate them immediately. Don’t procrastinate combine your mortgages if you can, consolidate these bills now into a second mortgage and improve your cash flow instantly!Today on CNN, they are talking about credit card companies seriously considering raising minimum credit card payments from 3% of the outstanding balance. What is going to happen to your budget if they do increase your minimum monthly payments on your credit cards to 4% or maybe even 5%?Can you afford paying $200, $300, $500 or maybe even 1,000 more each month?Hopefully they will not go through with it and things will remain as usual, but what if they go ahead with it. How are you going to survive? My suggestion to you is, pay off these credit cards today! Consider consolidating them into a second mortgage.
Home Mortgage rates
If you have a home mortgage that is adjustable or will adjust in the next couple of years. You should seriously consider converting your loan to a fixed rate mortgage. Here are some changes in the index market just within the last six months. 11th District COFI indexes went from 2.972 to 3.604 (21% increase), LIBOR went from 4.0882-4.8260 (18%), One Year Treasury from 3.77-4.91 (30%). If you don’t know what these indexes are, you are to get yourself educated. These indexes are the vehicle wherein your adjustable rate mortgage programs are tied to. Even if you loan is fixed for two years, they have indexes that will come to place once your second year anniversary comes to the picture. “After the limited initial periods end, the monthly payment for the holder of this nontraditional mortgage must increase-even if interest stays flat-and the size of that increase can be very substantial,” Comptroller of the Currency John C. Dugan said. Make your move to try to weight your option to convert your adjustable rate to a fixed rate mortgage.
If you have a line of credit on your home, that rate has gone up one full percent just six months ago, should you be worried. Yes, of course, try to either combine that into one loan or refinance your line of credit to a fixed rate second mortgage. I am terrified when I have talk to several readers not realizing that they could have gotten fixed second mortgages when they were applying for a loan. Your best options for second mortgages are if your credit is up to the lenders par and you have some equity in the property.
There are many variables that can influence the rates on long-term debt instruments, but an understanding of key economic indicators can provide clues to the future direction of interest rates.
Gross Domestic Product (GDP) – the output of goods and services produced by labor and property located in the US – and is the most important indicator.
Consumer Price Index (CPI) – is a measure of the average change over time in prices paid by urban consumers of a fixed market basket of consumer goods and services. Tied to inflationary concerns.
Producer Price Index (PPI) –is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services.
Payroll Employment – The government's employment report provides employment, hours and earnings estimates based on payroll records of business establishments. The payroll employment is the most significant indicator of current economic trends each month
Unemployment Rate - The government's employment report provides information on the unemployment rate and the number of unemployed persons by occupation, industry, duration of unemployment, and reason for unemployment.
Consumer Credit - Consumer credit data tracks debt levels for auto financing and commercial banking credit and are considered a fairly good indicator of consumer spending. Consumer credit report is generally considered to have little impact on interest rates.
Housing Starts - Housing starts is one of the leading economic indicators. A higher-than-expected increase in housing starts triggers economic growth and is considered inflationary, causing bond prices to fall and yields and interest rates to rise. Likewise, decline or declining trend in housing activity slows the economy and can push it into a recession, causing yields and interest rates to fall.
