Wednesday, September 28, 2005

Interest Rate Report - October


Mortgage Rates Hold Steady

Alan Greenspan must be really frightened of inflation. At every opportunity, he raises short term interest rates.

But he seems to have no effect on longer term rates, like mortgages.

Why not?


Katrina, Rita, gasoline, and the economy.

Many economists believe that higher gasoline prices will divert spending, so the economy won't grow fast enough to spur rampant inflation. Of course, gasoline costs more and that IS inflationary, but food and energy have always been volatile. It is the REST of the economy that experts look at as a gauge of inflation.

Plus, Katrina packed a wallop. Rebuilding will take resources that could cause slower growth, too.

Then there are the fundamentals that have been discussed in this space for months -- lower wage growth because of illegal immigration, shipping jobs overseas because the internet has enabled a true worldwide economy.