If interest rates were much higher than they are today...

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[w¡n9Nµ7 §£@¥€r 123]

Ok, this should have been multiple choice. sorry.

[Amby 490]

ok so my sister is 19 and she just got a brand new car friday and they did the bank stuff at like 4pm today and without a cosigner she got a 4.6% interest because she went through her credit union and agreed to direct withdrawals from her account. otherwise it would have been 5.1% that doesn't seem high to me for someone who has very little credit.

btw I answered that I don't need credit because I can pay for everything with cash. I do use my credit cards for almost everything but pay them off every month. I like points and miles and stuff

Edited September 30, 2008 by Amby

[Ms. Squirrel 11]

I am good too.

I am more worried about flights getting more expensive due to energy price increase. If an economy flight to CLT starts costing as much as the business or even worse, first class flight, then I won't be able to go over there 4 times a year.

[Imua 0]

I am good too.

I am more worried about flights getting more expensive due to energy price increase. If an economy flight to CLT starts costing as much as the business or even worse, first class flight, then I won't be able to go over there 4 times a year.

Same here - Govi and I don't drive and don't need to and a house was way unaffordable for us even before this whole mess started, but I am worried about airfares going crazy - I think this is more due to the increase in fuel cost rather than interest rates but it's probably all related....

[pedroh 21]

yea energy prices are what would affect me too.. not that much a house..

[Dr. Obvious 49]

I can't see doing any of those things in the next 5 years regardless of interest rates.

Another vote for energy prices.

[Nessa 23]

I don't need no stinkin' credit. I can buy everything I need with cash!

[greeneyedgirlfl 0]

I'm starting grad school in the next couple of years...I'm hoping to pay for it with bonus money from National Board certification. But if they don't pay it anymore, I will have to get a student loan...

[caybee 21]

We can pay cash for anything we really need. If it got that bad, we'd just keep renting and not try to buy a house.

[mawilson 2,133]

I am good too.

I am more worried about flights getting more expensive due to energy price increase. If an economy flight to CLT starts costing as much as the business or even worse, first class flight, then I won't be able to go over there 4 times a year.

What energy price increase?

Oil is down to $93 / barrel (from almost $150 earlier this year!)

[GiGii 4]

I am good too.

I am more worried about flights getting more expensive due to energy price increase. If an economy flight to CLT starts costing as much as the business or even worse, first class flight, then I won't be able to go over there 4 times a year.

What energy price increase?

Oil is down to $93 / barrel (from almost $150 earlier this year!)

But the price at my pump has only gone down about 30 cents, and airfare despite the decrease in oil, has only skyrocketed.

[w¡n9Nµ7 §£@¥€r 123]

I filled up last weekend at $2.99!!

[rebeccajo 14]

It isn't the rate of interest charged for credit that stops people from buying stuff. It's the price of stuff.

But, low interest rates can affect supply and demand.

That's partly how the housing crisis unfolded. The lower mortgage rates fell, the more attractive home ownership became. It was like there was a 'fire sale' on money. More people were buying. Dwellings became more scarce so the prices shot up.

It's really not that painful to pay even as much as 3 or 4 percent more for a loan if the price of a good (house, car, education) is reasonable. If the price of a good has gone out of sight because of inflation, then you NEED the lower interest rate in order to be able to even remotely afford it.

I was in the mortgage business when interest rates were as high as 12 percent (early 80's). Granted, we weren't making as MANY loans as we did later. But we were still making them. People still need a place to live and Americans want to be homeowners. The key variable though was the price of the real estate. If I think back to transactions I was involved in back then, I would wager that home prices nearly DOUBLED between then (the early 80's) and the recent boom. Wages have not. I remember what I paid for cars 20 years ago and the same could be said for that commodity.

Edited October 8, 2008 by rebeccajo

[GiGii 4]

It isn't the rate of interest charged for credit that stops people from buying stuff. It's the price of stuff.

The rate of interest does play a role, a major one! If the rate on a mortgage goes up, the effective monthly price of the home is up, and people wouldn't be able to afford to buy it.

I disagree to think that its "not painful" to pay 3-4% more on a home/car loan. With the credit market dried up now (at even the below 6% rates), try raising to 9-10% and barely barely anyone would qualify for a loan, and hence totally stall the market.

Interest rates are key, hence why the Fed dropped theirs today.