Liberal Forum

To stave off Bidenflation. 

Powell says Fed will determine future rate increases 'meeting by meeting'

Chair Powell said the FOMC gave no guidance on the potential for further rate increases at future meetings.
"It's not something we've looked at," he said. "We're going to be going meeting by meeting and as we go into each meeting, we're going to be asking ourselves the same questions. So we haven't made any decisions about any future meetings, including the pace at which we consider hiking, but we're going to be assessing the need for further tightening that may be appropriate … to return inflation to 2% over time."
—-

The Dow is rising slightly on the news.

This is why the American dollar, is the world’s reserve currency.

No President would ever raise rates if the decision was political.

You know what else is rising? People's mortgage payments, Car payments and credit card payments.

And those people vote!

Bruce » 26 Jul 2023, 2:09 pm » wrote: ↑

26 Jul 2023, 2:09 pm

Powell says Fed will determine future rate increases 'meeting by meeting'

Chair Powell said the FOMC gave no guidance on the potential for further rate increases at future meetings.
"It's not something we've looked at," he said. "We're going to be going meeting by meeting and as we go into each meeting, we're going to be asking ourselves the same questions. So we haven't made any decisions about any future meetings, including the pace at which we consider hiking, but we're going to be assessing the need for further tightening that may be appropriate … to return inflation to 2% over time."
—-

The Dow is rising slightly on the news.

This is why the American dollar, is the world’s reserve currency.

No President would ever raise rates if the decision was political.

**** Fed.  Now I need to attempt to determine an ROI.  We are building a new home and will finance a portion for a couple of years.  I need to see how much it will cost me to buy down the rate, how much that reduces the note and how long it takes to get to a net of $0.  Just keep the **** rate as is until the end of the year.
 

Thanks plugs n jugs all the electric **** just got more expensive mortgages rates just went up let’s see how they spin this

Warcok » 26 Jul 2023, 2:24 pm » wrote: ↑

26 Jul 2023, 2:24 pm

You know what else is rising? People's mortgage payments, Car payments and credit card payments.

And those people vote!
 

I'll give you credit card payments.  However, unless someone has an ARM, their mortgage payments are not increasing.

ConsRule » 27 Jul 2023, 6:32 am » wrote: ↑

27 Jul 2023, 6:32 am

I'll give you credit card payments.  However, unless someone has an ARM, their mortgage payments are not increasing.

Home owners insurance and property taxes are rising, most will see an increase in monthly payments.
 

Fuelman » 27 Jul 2023, 8:49 am » wrote: ↑

27 Jul 2023, 8:49 am

Home owners insurance and property taxes are rising, most will see an increase in monthly payments.

Do you pump gas in New Jersey?

ConsRule » 26 Jul 2023, 2:27 pm » wrote: ↑

26 Jul 2023, 2:27 pm

**** Fed.  Now I need to attempt to determine an ROI.  We are building a new home and will finance a portion for a couple of years.  I need to see how much it will cost me to buy down the rate, how much that reduces the note and how long it takes to get to a net of $0.  Just keep the **** rate as is until the end of the year.

Historically, 7% isn't that bad of a rate on a mortgage.  However, with house prices screaming upwards, and no inventory on the market right now - 7% + 3x house prices creates a deadly situation.
 

Fuelman » 27 Jul 2023, 8:49 am » wrote: ↑

27 Jul 2023, 8:49 am

Home owners insurance and property taxes are rising, most will see an increase in monthly payments.

But those are not impacted by increases in the interest rates...which is the point of this thread.
 

Skans » 27 Jul 2023, 9:05 am » wrote: ↑

27 Jul 2023, 9:05 am

Historically, 7% isn't that bad of a rate on a mortgage.  However, with house prices screaming upwards, and no inventory on the market right now - 7% + 3x house prices creates a deadly situation.

It is when the rates were 2-3%  

ConsRule » 27 Jul 2023, 9:18 am » wrote: ↑

27 Jul 2023, 9:18 am

It is when the rates were 2-3%

Well, the long-term low rates caused inflated house prices over a long period of time.  The 7% interest rate really isn't the problem. Keeping rates at 2-3% for over a decade was the real culprit.  I think we're essentially saying the same thing here.  
 

Skans » 27 Jul 2023, 9:21 am » wrote: ↑

27 Jul 2023, 9:21 am

Well, the long-term low rates caused inflated house prices over a long period of time.  The 7% interest rate really isn't the problem. Keeping rates at 2-3% for over a decade was the real culprit.  I think we're essentially saying the same thing here.

We are...but in this particular case, it's all about me  

The Fed just needs to shut the **** up and sit on their hands until we close (or at least get to the point where our rate locks).  But it will probably only be a couple of years of "pain" paying interest.  Then the house will be mortgage free. And we could make it mortgage free now...but we would take a bath on income taxes.  I haven't done the math on that option, but paying interest is spread over time...taxes are a one time hit.
 
 

ConsRule » 27 Jul 2023, 9:45 am » wrote: ↑

27 Jul 2023, 9:45 am

We are...but in this particular case, it's all about me  

The Fed just needs to shut the **** up and sit on their hands until we close (or at least get to the point where our rate locks).  But it will probably only be a couple of years of "pain" paying interest.  Then the house will be mortgage free. And we could make it mortgage free now...but we would take a bath on income taxes.  I haven't done the math on that option, but paying interest is spread over time...taxes are a one time hit.

I think you're wrong about the taxes.  First, my understanding is that you can't take a deduction for mortgage interest anymore. Second, there is no tax consequence to buying a house over time; only selling it and taking a note and mortgage back. As the purchase-money seller/lender you can spread the receipt of funds over a period of time.

You're just the buyer - no tax advantage there.   So, if you can pay cash for the house rather than commit to a mortgage, that's like investing in a 7% AAA bond. You can't find that anywhere, so I'd opt to pay cash, if you can.
 
 

Skans » 27 Jul 2023, 10:03 am » wrote: ↑

27 Jul 2023, 10:03 am

I think you're wrong about the taxes.  First, my understanding is that you can't take a deduction for mortgage interest anymore. Second, there is no tax consequence to buying a house over time; only selling it and taking a note and mortgage back. As the purchase-money seller/lender you can spread the receipt of funds over a period of time.

You're just the buyer - no tax advantage there.   So, if you can pay cash for the house rather than commit to a mortgage, that's like investing in a 7% AAA bond. You can't find that anywhere, so I'd opt to pay cash, if you can.

Either I am not explaining well, or you are too focused on one side.

First, you can still deduct interest and property taxes...it's just that the standard deduction is so high very few pay enough.  If you actually read what I posted, I said we could make the purchase mortgage free but would take a bath on taxes. We have enough saving for 20% down and closing...and still have almost one year of our current income in the account.

A loan against the 401(k) is not an option because we focused on long-term investing in other ways and only contributed up to the percentage of the match.  Therefore, the account balances do not allow a large enough loan as it would exceed the percentage of the balance eligible for loan (we knew of this restriction since the very beginning...it wasn't an issue). Additionally, both plans would require the loan be repaid in full if we decide to retire...which is a possibility.  Of course, given our age we could simply take money out, but that is taxable income.  Given we already have income greater than the tax table, the taxes on that income would be really high (by my definition).

If we decide to sell equity investments, we will incur significant capital gains.  The gains will never be completely avoidable, but we don't want them all at once.

My wife is one of two beneficiaries on one trust and one of six beneficiaries on a second trust.  Using today's numbers, she will inherit just over $1 million (and both trusts must liquidate when her mother passes away per the language of the trusts).  Her mother turns 99 soon and is in slightly worse health than the "typical" person that age.  Most of that total will be stocks, but my wife benefits from the step up in basis of those stocks and can immediately sell them for no (or very little) capital gains.   Not to be cold and callous, but the odds of her living more than 2-3 more years are slim so a mortgage is a relatively short term instrument.

Both interest and taxes are an expense...we will probably choose to use cash to pay the expense over time (interest) rather than all at once (taxes).
 
 
 

Skans » 27 Jul 2023, 9:05 am » wrote: ↑

27 Jul 2023, 9:05 am

Historically, 7% isn't that bad of a rate on a mortgage.  However, with house prices screaming upwards, and no inventory on the market right now - 7% + 3x house prices creates a deadly situation.

Ronald Reagan won 49 states and 60% of the popular vote with a Fed funds rate of 9%

—-
Nov 22, 1984 — The new rate is 8 1/2 percent. The cut in the discount rate, as it is known, confirmed a shift toward lower interest rates
——

The high was 20% under Carter in 1980.

The ideal Fed funds rate is 4% with 2% inflation and 3% growth and 4% unemployment 

And no war

We have a 5 1/2 Fed rate, 3% inflation, 2.4% growth, and 3.5% unemployment 

And the Ukies are fighting our war 


 

Warcok » 26 Jul 2023, 2:24 pm » wrote: ↑

26 Jul 2023, 2:24 pm

You know what else is rising? People's mortgage payments, Car payments and credit card payments.

And those people vote!

The only plus for me is that I'm making a killing on my CDs. 

DeplorablePatriot » 27 Jul 2023, 11:00 am » wrote: ↑

27 Jul 2023, 11:00 am

The only plus for me is that I'm making a killing on my CDs.

What's "making a killing" these days?

I see 5.35% APY on a quick google search.
Better than a bank savings account. But is that a killing?

DeezerShoove » 27 Jul 2023, 6:16 pm » wrote: ↑

27 Jul 2023, 6:16 pm

What's "making a killing" these days?

I see 5.35% APY on a quick google search.
Better than a bank savings account. But is that a killing?

5.35% is 2.35% over headline inflation of 3%.

 

Skans » 27 Jul 2023, 9:05 am » wrote: ↑

27 Jul 2023, 9:05 am

Historically, 7% isn't that bad of a rate on a mortgage.  However, with house prices screaming upwards, and no inventory on the market right now - 7% + 3x house prices creates a deadly situation.

Do you think another 2008 crash is on the way?