LET ME LOOK INTO MY CRYSTAL BALL . . .

I cannot tell you how many times a day I am asked about the future of interest rates. Actually, I can. At least 5 times. Crazy thing is, I always give the same answer: I don't know! Truth is, nobody knows.

Last week, after the Federal Reserve met and lowered the Fed Rate by a half a point (0.5%) I started getting calls from people who were so relieved to be able to get a lower rate on their home. These same people were confused when I told them that since the Fed announcement we have seen interest rates increase.

So, here is my point: Most people have been mislead in their understanding of what causes interest rates. I have business owners, Financial Advisor's, Accountants, even people with their MBA's and PhD's who don't understand what determines interest rates. To be honest, many industry insiders and loan officers don't fully understand.

Now, I am not an economics professor, and I don't claim to know every aspect of the interest rate system, however, I am convinced that a little bit of good information goes a long way in understanding what is happening with interest rates. There are 5 main factors that affect interest rates: Supply and Demand, Monetary Policy, Inflation, The Bond Market, and The Federal Reserve. No one factor has a greater affect. In truth, all factors are related. When one struggles, the others react; When one is succeeding, the others react.

I wrote a report as a part of my 5 THINGS series that covers the 5 things affecting interest rates. In it I give some explanation of how those things I listed actually affect how much it costs you to borrow money. It's a good report, as those on my Inner Circle Email list will attest.

If you would like more information send me an email and I will send you the report (maybe at some point I will figure out how to link to the report from here, but hey, we just started this whole Blog thing--I am still learning how to post basic messages). Email me at jayhart@cottonwoodmtg.com

As always, remember We Make It Easy . . . Everytime!