Interest up as interest rates get lower
This is good news for people who are interested in purchasing a new home or refinancing their existing mortgage. On the flip side, people who have money market accounts and rely on bank CDs -- particularly the elderly who don't want to take a lot of risks -- could be hurt by the low interest rates.
Eileen Wrobleski has lived in her St. Joseph County home for 15 years. She loves the house and so do her grandchildren.
"I have 13 and 10 great grandchildren," says Wrobleski, "they like the woods, they like to run."
She is not about to leave her beautiful home which is surrounded by nature, but she certainly wouldn't mind a lower monthly mortgage payment.
"Certainly, makes life a little easier," says Wrobleski, "payments are lower, so why not?"
Wrobleski is like more and more American's these days, considering refinancing to take advantage of the low interest rates.
"They are at 3 and three-eighths today for 30 year fixed and believe it or not 15 year fixed are at 3 percent," says 1st Source Bank Senior Vice President of Consumer and Mortgage Lending, Ray Yarber. Yarber says in an average year they get nearly 3 thousand applicants who are interested in refinancing that number is expected to go up.
The Federal Reserve last week announced it is likely to keep interest rates low -- close to 0 percent -- at least until the end of 2014.
This is good news for not only people interested in purchasing or refinancing their home but also for those interesting in buying a car and for the federal government which borrows a lot of money.
And while, it isn't a guarantee rates will stay low, some worry the announcement might discourage people from buying or taking out loans.
"On one side it is nice to have interest rates so low," says Richard Measell an economics professor at St. Mary's College, "but on the other side if people have the mind set they are going to stay low for a while, does that get people to not rush into something?"
Measell says the Fed's decision to announce rates will be low until 2014 reinforces that the economy is weak. He believes that could stop businesses from growing and expanding if they take the mindset that they want to wait until the economy is stronger.