How High's the Interest Rate, Mama?

Like the old Johnny cash song, not only does the water keep rising, but so do interest rates! The new Federal Reserve Chairman, Ben Bernanke, has continued his predecessor’s (Alan Greenspan) habits of raising the short-term interest rates for the 16th straight time. For adjustable rate mortgages (which include most equity lines), credit card debt and just about any short term financing transaction, this has just increased those costs for the 16th straight time, too. An aside here is Bernanke’s nickname of “helicopter Ben” which refers to a view that he holds that if deflation ever starts to appear then the government can always just “print more money” and drop it from a helicopter!
It is this theory of his that does show a difference between him and Greenspan. Bernanke wants to have some inflation because it effectively lowers the cost of government borrowing.
Now that I have lost almost everyone reading this, I’ll explain what this means to the one person still following along. It means that the Fed, under Bernanke, is less likely to continue to raise rates and this long cycle of watching the interest payments stair stepping up will come to an end sooner rather than later. Of course not before they have done some serious damage to your pocketbook, though!
Which finally brings me to the whole point here. If you have any large adjustable rate loans, be they mortgages, home equity lines, car loans, credit card debt, student loans, then call me and let’s move that debt to a new fixed rate mortgage. Those mortgages have again dropped back down into the mid-6% range and, as a fixed rate; you won’t care how high the water is, Mama!

Fixed Rates for Conforming Loans (under $417,000) as of 5/23/06 (a.m.) are:
(Rates quoted are for “0” point loans)
30 year: 6.625% (APR 6.702%) payments are $2,670.10/mo
15 year: 6.25% (APR 6.38%) payments are $3,575.45/mo.