Posted on 06/04/2023 9:45:57 PM PDT by RomanSoldier19
Consumers facing high asset prices and rising interest rates have a few loan options. None are particularly attractive.
Buyers of homes or new cars might be better off waiting. But if you must go ahead, either face taking on a big monthly payment, or stretching out the loan term to keep the monthly bill down - as many are doing.
New car loans lasting 73-84 months (over six years) rose to 34.4% of the market in 2022 from 28.6% in 2018, according to auto information site Edmunds. A few borrowers are going even longer, with less than 1% of new car loans lasting 85 months or more.
(Excerpt) Read more at reuters.com ...
“rising interest rates “
Our rates are not really high now .. more like a normal rate.
I remember JIMMY ... he did rates right.
12% ...could that be coming ? Still wouldn’t be close to JIMMY .. the rate king.
The fed needs to raise by 1/2 ..if they “skip” or do a 1/4 they will fall farther behind .
... in my opinion ...
I’ve read that, in Japan, home mortgages can run for two or even three generations. Are we going there?
“High rates”? We are barely back to the historical average. Early 80’s were “high rates”.
https://fred.stlouisfed.org/series/PRIME
https://www.macrotrends.net/2604/30-year-fixed-mortgage-rate-chart
Akiya
Akiya banks: Real estate listings promoting sales of abandoned Japanese homes
https://www.rethinktokyo.com/2018/09/19/akiya-banks-abandoned-homes-japan
The Ministry of Internal Affairs and Communications estimated there are approximately 8.2 million abandoned houses across Japan in 2013
U.S. household (HH) debt (measured by the FRED variable “CMDEBT”) rose relative to both GDP and disposable income over the 1980 to 2011 period. Household debt as a % disposable income rose from 68% in 1980 to a peak of 128% in 2007, prior to dropping to 112% by 2011.
I paid a 10.5% mortgage rate in 1979 on my first home. Yes, rates were higher then, but the big difference was that we didn’t have a $32 trillion national debt. With rising interest rates after several decades of artificially low interest rates, we are now paying over $500 billion annually on debt servicing costs alone. Each Fed increase in interest rates results in higher debt servicing costs consuming more of the Federal budget.
And we have an aging nation with 10,000 baby boomers turning 65 every day. And that will continue to 2030. SS and Medicare costs continue to rise due to the increased number of recipients along with increased COLA costs due to inflation. Today’s retirees are funded by today’s workers. In 1950 there were 17 workers for every retiree. Today there are less than three and by 2030 it will be two workers for every retiree. The Medicare Trust Fund will be exhausted by 2028 and the SSTF in 2034. By law, benefits will be reduced to revenue received, about a 20% reduction in benefits.
Yep, true problems not being addressed/talked about by anyone but the “freedom/tea party” caucus in Congress. McCarthy/GOPe kicked the can yet again.
I shouldn’t be too hard on current homebuyers (usually under 30 y/o)...they weren’t around for J. Carter era interest rates. I’ll give some leeway RE: rate complaining.
The Fed Reserve is in a pickle now...raise/keep rates higher to fight inflation, or knuckle under to pols & rats and re-start QE/stimulus and lower rates.
I really don’t see a way of out the pickle of the items you mentioned...the math (cuts required, etc.) will never add up...the only “out” I see for the Fed & pols is “inflate away” any additional monetary expansion & the national debt....but don’t let inflation get TOO high. Not going to work IMHO...the Fed will drop the balls at some point. Sad situation.
Pay off your debts, folks...including yoir mortgage. Neither a borrower nor a lender be.
Worry not! The dollars will be reduced to Funny Money when Russia/China and BRICKs pulls down the dollars. We all will be millionaires ! Colorful “New Dollars” will be printed up with higher denominations. President Kamila on the ten, Sojouror Truth, on the twenty, Sitting Bull on the Fifty, Obama on the seventy five and MLK on the One Hundred, Harvey Milk on the Two Hundred, General Millie on the five Hundred, and LBJ on the One Thousand, Hillary Clinton on the Million Dollar Bill. A Big Mack will be $45 dollars each (With Turnip fries and Drink $55)
>>The average age of a passenger vehicle on U.S. roads has reached 12.5 years, according to research firm S&P Global Mobility. The firm analyzed data from the 284 million vehicles currently registered for the road in America, finding that the average age of vehicles on the road grew by more than three months versus 2022.
https://www.roadandtrack.com/news/a43903366/average-car-age-12-years/
Im using an 02 f350 superduty stake bed that I’ve put 335000 miles on. The price of new or even used trucks is huge. Plus there is a level of tech in new trucks that scares me. Do I buy a new truck or do I put say ten grand into the old one? Frankly I lean toward the latter. The trans was totally rebuilt a while back . The rear is good. Brake and fuel lines all replaced engine still pulls strong. I’d replace the engine and the leaf springs and the bed. But it would be so easy if I could just get another like we used to do.
This wasn’t a question just 20 years back as truck payments were relatively small and paid in 4 years.
In college I took a couple of courses on financial management. The jist of it was that if rates were going up then borrow. The property you finance will be worth more in the future and your income will be greater. If interests are going down pay cash or don’t buy. What you are purchasing will soon be worth less than you paid in a declining market. If it is real estate then purchase the smallest house, least expensive you can, get it paid for, remodel and sell and move up preferably with cash. If you can’t pay cash put down as much as you can and make the terms as short as you can stand.
In our society we have pressure to have it all now but that is unreasonable.
I own rental properties. The people I rent to have jobs and are nice people but don’t think twice about paying $100 a month for cable and another $100 a month for a phone bill that includes a “free” I-Phone. They don’t think twice about getting a $9.00 coffee on the way to work or paying $40 for KFC on the way home from work but they can’t save enough money for a down payment on a house. The items listed in this paragraph would give them well over $5000 a year or more in savings but they can’t do it. They would rather have the movie channel, the super high speed internet and a car that costs more than they can afford.
Nobody knows if they will have a job or any income tomorrow. In this economy which it appears the authorities are trying to crash it is especially important to have savings. Savings do not have to be in money, purchase extra real estate, precious metals or commodity stocks which are all somewhat inflation protected, your money is not. An example is that in 1964 a gallon of gas was nineteen point nine cents. In 1964 our dimes and quarters were made of silver, a metal that somewhat holds its value. Today those two silver dimes will still buy a gallon, or more of gas in most localities because silver is $23 an ounce. Two silver dimes represents 90% of 10% of an ounce each, or a little over $4.00.
Learn about money and do what is best for you in the long term.
I did without some in my younger days but now that I’m retired I don’t worry about what Social Security does to me. Social Security is a nice little bonus each month but fortunately I prepared to do without it, if you’re wise you won’t count on it either.
“ JAPAN’S 100-YEAR BANK LOANS”
https://money.cnn.com/magazines/fortune/fortune_archive/1990/05/21/73567/
“ Nippon Mortgage and Japan Housing Loan, two big home lenders, are offering 99- and 100-year multigeneration loans with interest rates from 8.9% to 9.9%. ”
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