A recent spike in mortgage rates has created a new predicament for potential homebuyers: Forge ahead and try to lock in now? Or hold off?
Dhruv Gupta was quoted a 3.5 percent rate in May while searching for a place to buy in the San Francisco area. Less than two months later, he's looking at 5.2 percent for the same loan. But this trend has not deterred Gupta.
"It's a fact of life," he says. "I mean I can't control them, so what do you do?"
Alarm bells went off in China's financial system yesterday. That's because interest rates for loans that banks make to each other - like the loans we've just been hearing about - shot up, drying up credit as China's banks searched for cash. The effects reached markets here, where the Dow dropped more than 2 percent yesterday.
All of this seems to be caused by the Chinese government trying to send its banks a message. To explain what happened and why, we turn to NPR's correspondent in Shanghai, Frank Langfitt. Good morning.
Federal Reserve Chairman Ben Bernanke said Wednesday that a fall in the unemployment rate would not automatically trigger a rise in interest rates. He spoke to the media after the central bank issued a policy update.
Credit Susan Walsh / AP
The Federal Reserve will continue its program of purchasing $85 billion in securities and will leave the target interest rate for federal funds untouched to support the U.S. economy, the U.S. central bank said in a policy update issued Wednesday afternoon.
Here's a summary of the state of the U.S. economy from the Fed, which concluded two days of meetings today:
OK, Scott just made clear economic issues have some competition for top billing at the G 8 Summit in Northern Ireland. We do, though, want to drill down into one economic question this morning, and that's why interest rates here at home are going up. The bond market has pushed them to the highest levels in 15 months, and that includes mortgage rates.
Let's turn, as we often do, to David Wessel. He's economics editor of The Wall Street Journal. David, good morning.
Home values have been rising in recent months, but mortgage rates have taken a rapid turn upward as well. Some investors are worried that the housing recovery may stall if mortgage rates jump too quickly.
Mortgage rates have seen a relatively sharp rise this month. The average 30-year fixed-rate loan hit 4 percent earlier in June — a big jump from the record lows of recent years. Some investors are now concerned that the housing recovery could be stifled if rates continue to rise quickly.
The Federal Reserve has two main missions: to maximize employment and minimize inflation. Right now, there are few, if any, signs that prices for goods are spiking, and the job market is still crawling out of its long, deep slump.