Saturday, April 02, 2005

The Effects of the Increasing Interest Rate

The Housing Boom is over, announces Business Week. Home mortgage rates are rising. This is going to effect people who want to buy new homes and will strongly effect people who have financed using Adjustable Rate Mortgages (ARMs) as their monthly payments increase.

Not only that, the people who have been refinancing their homes as prices went up and spending the money or paying off credit card debt are going to find that source of money isn’t there any more. Since consumer spending has been two-thirds of the economy, this is going to put pressure on the overall economy.

The article doesn’t conclude that we are in for a crash, but the economic increase is clearly over.

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