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Today's Mortgage Interest Rates And The Health Of The Economy

by elathrop

Ask anyone you see how the economy is doing and there is a good
chance he or she will tell you it's terrible!   At this point in
time, it is a fair assessment the economic conditions have
softened, but the truth is we are a long way away from a lousy
economy.

A lousy economy is usually marked by high unemployment, negative
Gross Domestic Product (GDP) and inflation.  Inflation means high
interest rates.  None of these things are occurring in our
economy today!

The economy has slowed down

While it is true there is a slowdown and many economists believe
we are heading toward a recession, there is no recession now. 
There hasn't been a recession since the mild one that started in
the final year of the Bill Clinton administration and remained in
place until shortly after the George W. Bush tax cut of 2001.

A recession is defined as two consecutive or more quarters of
negative growth as reported in the GDP.  As of yet we have not
had one!  So, why is there a common misconception the economy is
doing poorly?  Well, if you constantly beat people over the head
with false statements and half-truths, they will believe you
after a while.  Why are we getting these false statements and
half-truths?  Look no further than politics!

Misleading news reporting

Elections are often won on the strength, or should I say the
weakness of the economy, because the party who is out of power
usually wins the presidency when the economy goes sour. 
Therefore, the Democrat party with the assistance of their
parrots in the media have been berating the economy for the last
7 years.  An excellent GDP of 5% or a record low unemployment
rate of 4.5% did not stop them.

In short, the fact they weren't reporting factually didn't faze
them in the least!  Their hatred for George W. Bush inspired them
enough to abandon all ethics and tell untrue horror stories about
the economy every day.

Interest rates, a key indicator

When making a true valuation of economic conditions, how high or
low interest rates, especially mortgage rates interest are, play
a key roll.  The fact is interest rates are excellent right now
and though some may argue it may not be all good, it looks as
though they are headed still lower, at least for now.

In order to see just where we are within the realm of mortgage
interest rates, it would behoove us to take a look at where they
have been historically and see if we can gain some perspective by
doing so.

In 1971, the rates were just about where they are today, namely
in the area of 5.5%.  From that point, they increased through the
70's.  While it is true they, or any stock or commodity's price
in its rising stage, never goes straight up, interest rates
remained in an upward trend until 1983.

Controlling the price of gas

There were many things that contributed to high interest rates
at that time.  One of them was the fact price controls were
instituted on oil.  When price controls are instituted in a
supply and demand driven economy, the commodity whose price is
being controlled becomes unavailable.  Unavailability of oil
caused a true hardship for the economy of the U.S. and its
citizens for many years while these controls were in place. 
Until they were lifted the economy suffered.

Anyone who is saying the economy of the last 7 years was bad was
either not alive during the late 70's and early 80's, they have
amnesia or they are running for office in 2008.  A case in point
is the fact in 1983 interest rates on fixed rate mortgages peaked
at around 15%!  This was the rate given to people possessing A-1
credit.  Others had to pay more.  As much as 23%!

Interest rates came down, in large part due to the policies of
Ronald Reagan.  His free market capitalism based agenda was
sorely needed by the economy and it worked well during that
period.  The interest rates reversed in 1984 and went into a
downward trend that has yet to come to an end.

Bill Clinton the free trader, Bill Clinton the protectionist

During the last 3 administrations, Bush-Clinton-Bush many free
trade policies were put into place.  These policies made the cost
of consumer goods and capitol goods cheap and spurred on strong
consistent growth during those years.

Bill Clinton was particularly good at drawing up free trade
agreements.  Now he, Mrs. Clinton and Barak Obama are running
against these same agreements.  I guess the lust for power
transcends all logic.

So, where are the interest rates headed now?  Lower, of course!
Until we see a real bottom to the market they are still on a
downward trend.  Certainly, we will see this bottom if the White
House changes parties this fall.

Looking for a change?

We have candidates talking about ending Bill Clinton's NAFTA and
GHATT trade agreements.  This would be inflationary because, in
part computers would probably cost about $15,000 each if they
were made in the U.S.A.  Wouldn't that be good for business?

Also, these presidential candidates can't wait to put price
controls on oil!  So, look out 15% mortgage rates, here we come
again!  On top of that they have announced their proposed
spending programs and these programs add over $1,000,000,000,000,
that's one trillion dollars to our deficit!  All this is really
bad, but at least it will be an educational experience because
finally a lot of people will find out what a lousy economy truly
is!

Ed Lathrop is a successful Real Estate investor. He has developed
EzCalculator, a Mortgage Calculator that shows you how to save
$100,000 on your mortgage. Come visit this free site at <a
href=http://ezcalculator.com>Free Financial Calculator.</a> Also,
find out how to get your amortization schedule and use it to save
big money at: <a href="http://freeamortizationschedule.net">
Amortization Schedules Free.</a> These sites are not owned by any
lender, so no one will harass you for visiting!

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