Wasilla Real Estate News, Valley Market Real Estate

Interest Rates Are Going Up June 15th, 2008

Categories: Market Trends

I read quite a few articles on the financial markets every week.  For quite a while now there have been whispered warnings of inflation.  That whisper has now grown to a roar.

Oil prices have not settled, increasing the cost of all energy.  It has increased the cost of everything that needs to be transported from place to place. 

Now, with the crazy weather in the corn belt you can expect higher prices for corn, wheat, and other food products grown in places like Iowa.  If you have read the book, “The Omnivore’s Dilemma”, you realize that corn is in just about everything in the grocery store.

Here is a quote from a weekly update I get courtesy of Alice Roe of US Bank:

• “The United States is the world’s largest exporter of corn. Relatively rainy weather recently across the Midwest portions of the United States has delayed planting of corn. This caused corn prices to escalate. Wheat and other staples are also in high demand amid reduced supply, causing prices to rise. Couple these factors with rising energy costs and the picture does not look pretty. Higher commodity prices result in heightened inflationary fears. Many analysts predict the food price increases already seen most everywhere will continue.”

Interest rates for long term loans like mortgages are based on the the lenders feeling about long term inflation.  Higher inflation fears equals higher interest rates. 

Interest rates are already going up.  They will likely continue to increase for the near future.  If you currently have a loan in process…you might want to lock your rate in.  If you are shopping for a house, you might want to tie one up so that you can lock in the current low rates.

As with any advice like this, this is only my opinion.  You need to check out the situation for yourself before making your decisions.

More on this topic:

• LA Times 
• John Mauldin  I subscribe to his newsletter.
• Financial Times

Written by Marty Van Diest Please leave a comment.