Interest Rates to Skyrocket This Year!

The Only bright light for the real estate market is about to be smothered. Interest rates will skyrocket this year and next making it that much harder to qualify for mortgages, especially at today's high real estate prices.

The culprit is the US government. It must finance last year's record budget deficit of 1/2 Trillion dollars plus this years record busting deficit of about $2 Trillion, plus the stimulus package and all of the "quantitative easing" of the Federal Reserve, (which again, is as Federal as Federal Express!). And let's not forget the original $700 Billion Wall St Bailout, plus the approximately $2 Trillion additional which will be needed sometime in the next 18 months to bail out the banks again.

You can also expect to see various other multi Billion dollar bailouts; autos, states, pension funds, etc.

These humungus expenditures will be financed by the government saturating the market with Treasury Bonds. As more and more treasuries are issued, their prices will start to fall and when that happens their yield goes in the opposite direction, Up.

Also, 40% of our national debt is held by China and other foreign governments. When the prices of Treasuries and thus their investment in them starts declining, interest rates will have to be raised to incent them to buy more and to hold on to what they already have. Already the Chinese have dumped over 20 Billion in Fannie Mae and Freddie Mac Bonds during the last 5 months of the 2008. They have also halted investment in many American companies. They realize the US is going to flood the market with new Treasury issues and depress the prices.

Not only housing, but all businesses will be adversely affected with the rise in interest rates, including the stock market, which I believe will see Dow 5,000 before the year is out! Possibly as early as the release of the 4th Qtr, 2008 economic data, due out shortly.

It is important that you get out of debt, especially credit card debt, where they can increase your interest rates at will, as soon as possible. For information on debt relief, see our site: http:HowtoSolveYourMoneyProblems.Com