oops, guess that poll question range was too wide, not specific enough

[netmouse]

For those who answered (some form of) Yes, a certain loan interest rate seems excessively high, the majority responded that "too high " starts between 5 and 25 %, and I'd like to see a breakdown on that. Please answer this question too!

[Poll #1343223]

Comments

[gerisullivan.livejournal.com]

If prime is at 10%, why is a mortgage rate of 12% unreasonable? The Moneycafe chart shows that prime spiked just over 20% several times in the early 1980s. Ye, ghads.

Thanks for the link to the chart; it's interesting to compare it to the smaller swings in rates available to me during that same time period.

[grndexter.livejournal.com]

With a prime of 10% a 12% mortgage would only allow the banks a 5% "spread" - very low. Out of that 5% would have to come operating costs, taxes, payrolls, etc.

The high interest rates in the '80s were from the Ford/Carter years when Chairman of the Fed Alan Volker was fighting Stagflation by raising interest rates to stabilize the dollar and defeat inflation. (Which is what we need now!)

Voler's action went against almost all contemporary theories and thought about what was needed but was correct and stabilized the dollar's value and I believe made the economic boom of the Reagan years possible. (Reganomics? Pthbbbbbpthb! It was sound monetary policy.)

Bungling Ben Bernancke is doing the things that the nay-sayers wanted back then, and they're as wrong now as they were then.

[sethb.livejournal.com]

A 5% spread is low? The current average mortgage rate (for new mortgages) is under 5%.

[grndexter.livejournal.com]

Uh huh. And how many "points" are being added up front? And mortgage "fees" and brokerage "fees" and are those low rates teasers or fixed or short term or long term or ARMS. Lottsa variables in there. Just because an ADVERTISED rate is one thing, that doesn't make it the ACTUAL (real world) rate. With a Fed funds rate of .25 (+/-), a spread of less than 5% is LOW! (Which is why my minimum ARM rate is 6%)

If PAUL (Not "Allen" DOH!) Volker gets an audience, or if he's not too senile to realize we're having Stagflation not a "liquidity crisis", then those rates can go up plenty and fast!

[sethb.livejournal.com]

Statistics on these things are published. Currently, 5.1% (with 0.7 points+fees) for a 30-year fixed, 4.8% (with 0.7 points+fees) for a 15-year fixed. Two weeks ago, they were both under 5%.