Long term economic effects of low mortgage rates

1 Reply

What do you think will be the long term economic effects of our current low mortgage rates? With the average residential mortgage interest rate currently at 2.98% and the average annual rate of inflation at 3.22% wont the banks be slowly losing money? Especially when you consider how much cash is currently being pumped into the economy to prop it up causing the projected inflation rate for the next few years to be above 5%. Are we looking at the next major banking crises?

    Banks are swamped with refinance applications and pumping out millions of sub 3% loans. I personally locked in a 2.75%, 30 year fixed rate for one of my fourplexes. How are banks going to be able to show a profit 30 years from now?

If the rates stay like this for another year or two, we'll definitely see property values go up. The Federal Reserve has stated that they plan on raising interest rates back up when they think the economy can handle it so I don't think that we'll see too many issues long term in the 30-year range. Just my opinion. 

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