Bernanke Named Person of the Year, Keeps Rates Low- So?

by in Economy, News, Real Estate - · 5 Comments  

Time Mag’s Person of the Year

Ben Bernanke economic speech Bernanke Named Person of the Year, Keeps Rates Low So?The Federal Reserve Chairman, Ben Bernanke was named today as Time Magazine’s Person of the Year.

Time describes him as “not… a typical Beltway power broker. He’s shy. He doesn’t do the D.C. dinner-party circuit; he prefers to eat at home with his wife, who still makes him do the dishes and take out the trash. Then they do crosswords or read. Because Ben Bernanke is a nerd.”

The main reason Big Ben was chosen is “that he is the most important player guiding the world’s most important economy. His creative leadership helped ensure that 2009 was a period of weak recovery rather than catastrophic depression, and he still wields unrivaled power over our money, our jobs, our savings and our national future. The decisions he has made, and those he has yet to make, will shape the path of our prosperity, the direction of our politics and our relationship to the world.”

Which brings us to today’s rates

As most predicted, the Federal Reserve today said they would leave its short-term interest rate at around 0%. This is the final meeting of the year and in a statement from the Federal Reserve Board, the rate was kept low primarily because “the housing sector has shown some signs of improvement over recent months. Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth and tight credit.”

HURRY UP and follow Bernanke’s cues?

In the insanely long extended Time Magazine interview with Bernanke, he revealed that he refinanced his own home this year at 5% and switched from a floating rate which Bernanke said “exploded” in cost, to a 30-year fixed.

On top of that, the Mortgage Banker’s Association announced today that mortgage rates rose for the second week in a row from 4.88% to 4.92%, so historically low mortgage rates may be inching a little higher, so should we all take Bernanke’s cue and refi?

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Lani Rosales

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Matthew Rathbun

ROFL :) I really don't know what to say...

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Ted Jernigan

The other lurking loan qualification issue will be recent retirees with great assets and only social security for income. This will likely create a very high debt to income ratio and anything above 50% prevents loan approval.These people have no history of withdrawals from their retirement assets. Lenders want a 2 year history of withdrawals. Income from new employment will not count until there is a two year history. Good advice for retirees is to purchase their retirement home and qualify for their loan before retiring.

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Arn Cenedella

Lani: I agree with Ben. :-) It is a good time to refi and lock in 30 year rate, if you can. With short term rates at 0%, odds are rates will rise in the long-term. Of course, the difficulty in refinancing today often is due to the value of property decreasing and therefore increasing the loan to value ratio to 100% and above. In today's mortgage environment, most lenders will probably want 80% loan to value (LTV). Bottom line, you need to have equity to get a good 30 year refi fixed loan. If there is a home equity loan on property, that can add complications. If you can refi into 30 year fixed, probably a good idea to do so. At some point when the economy turns, we will probably have inflation and that would push long-term rates upward. Of course no one really knows what will happen - probably the major lesson from last year's stock and financial market meltdown is that lots of smart expert informed people and many large public and private institutions had no idea the danger the economy was in and did not have adequate contingency plans set up to deal with what did happen.

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Matthew Rathbun

ROFL :) I really don't know what to say...

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Ted Jernigan

The other lurking loan qualification issue will be recent retirees with great assets and only social security for income. This will likely create a very high debt to income ratio and anything above 50% prevents loan approval.These people have no history of withdrawals from their retirement assets. Lenders want a 2 year history of withdrawals. Income from new employment will not count until there is a two year history. Good advice for retirees is to purchase their retirement home and qualify for their loan before retiring.

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Arn Cenedella

Lani:
I agree with Ben. :-)
It is a good time to refi and lock in 30 year rate, if you can.
With short term rates at 0%, odds are rates will rise in the long-term.
Of course, the difficulty in refinancing today often is due to the value of property decreasing and therefore increasing the loan to value ratio to 100% and above.
In today's mortgage environment, most lenders will probably want 80% loan to value (LTV).
Bottom line, you need to have equity to get a good 30 year refi fixed loan.
If there is a home equity loan on property, that can add complications.
If you can refi into 30 year fixed, probably a good idea to do so.
At some point when the economy turns, we will probably have inflation and that would push long-term rates upward.
Of course no one really knows what will happen - probably the major lesson from last year's stock and financial market meltdown is that lots of smart expert informed people and many large public and private institutions had no idea the danger the economy was in and did not have adequate contingency plans set up to deal with what did happen.

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  1. Real Estate Feeds says:
    December 17, 2009 at 9:55 am

    Bernanke Named Person of the Year, Keeps Rates Low- So?: Time Mag’s Person of the Year
    The Federal Reserve Chairm… http://bit.ly/6H8PAn

  2. PopREblogs.com says:
    December 17, 2009 at 9:55 am

    Bernanke Named Person of the Year, Keeps Rates Low- So?: Time Mag’s Person of the Year
    The Federal Reserve Chairm… http://bit.ly/6H8PAn

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