Interest rates up or down?

Discussion in 'Money Talk$' started by ReformedBaptist, Aug 16, 2007.

  1. ReformedBaptist

    ReformedBaptist
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    What do you guys think...will the feds keep rates at 5.25% or will the credit crunch and housing slump motivate them to lower rates?
     
  2. ccrobinson

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    I think they'll lower rates a quarter percent.
     
  3. webdog

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    Just in the last week or so, they left rates stay where they are at. I can see them maintaining this pattern at least for the next 2 quarters...and then if the economy hasn't picked up, and foreclosures remain high, I can see them lower it a quarter.
     
  4. webdog

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    I read today that the feds may lower rates next month! Not a good sign for the economy...
     
  5. TomVols

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    Depends on the effect that the Fed lowering of the discount rate has. I don't know if it will help a ton in the long run, but will help in the short run. How many of these subprime lenders do business at the discount window? I do know some major investment firms who have assumed some of the packaged loans in their funds, REITS, etc will benefit a little from this. Bear Stearns and some others have announced layoffs.

    I just hope that (1) we get the market purge we needed from some of these mortgage outfits, and (2) investors remain in the game for the long haul and stop panicking. The economy remains fairly strong, and yesterday even some financials were leaders in the market (WaMu was one, I forget the others).
     
  6. ReformedBaptist

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    How do you think REITs will benefit? I ask because I work for a large REIT. (I raise captial). I think it was Bear Stearns hedge funds that suffered as the credit crunch as they call it has affected sub-prime mortgages. We had a conversation about this today. Primary and secondary mortgages were, for awhile, being rated the same by the S&P. Therefore, mortgage companies got pretty creative with financing. It also meant that on the sub-prime loans they only had to keep a 10% cash reserve. The S&P re-rated (if that is a word) the sub-primes and the cash reserves were increased. Some lenders couldn't pay and went under. I think Homebanc was one of them.

    I don't think what is happening with Bear Stearns hedge fund business will affect their conduit lending business or those seeking those loans. The only thing I am seeing is the cost of primary loans going up, making returns on commercial real estate go down.

    In the real estate markets it will also being to eliminate traditional buyers of commercial real estate, creating opportunities. Warren Buffet has said, volatility creates opportunity. Private equity firms and other entities able to be in the buying market will find more buying opportunites both of commercial real estate and the aquisition of REITs. The big guys are gonna be eatin the little guys, especially with the REIT index down 30-40% right now. Those companies loan-to-values have changed. They are not buying anything right now, because they are overleveraged, and can't get financing. This eliminates many REITs out of the buying market as well.
     
  7. KenH

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    We'll know more about that the next time that the market tests support after the current bounce. If it fails to hold support, well, it could get really ugly in the stock market. If it holds support, well, it could be a rosy picture for stocks.
     
  8. ReformedBaptist

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    If things continue to go down, I am gonna start buyin...:thumbsup:
     
  9. DHK

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    Your interest rates have gone down. And our "loonie" (dollar) has gone up. In fact, it is the first time in over thirty years that the Canadian dollar hit parity with the American dollar. As one who attains some of their income from the States that hurts. In 2002 our dollar hit a low of only $0.62. In other words $1000.00 American dollars would be equal to approximately $1500.00 Canadian.
    Today, after the bank takes its commissioin, that same $1,000.00 American will only result in $980.00 Canadian. The weak American dollar has the same relative effect on other missionaries as well that are scattered across the world.
     

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