Thursday, July 12, 2007

How are interest rates determined?

Interest rates are affected by a number of factors. The Federal Reserve, which is charged with maintaining the stability of the nation's financial system, raises or lowers short-term interest rates in an effort to maintain that stability. The Fed regularly takes these actions in response to economic ups and downs that the country goes through on a fairly routine basis.

Short-term rates are raised in what are called expansions -- good times -- to keep the economy from building too fast and risking inflation. The Fed will lower short-term rates when the economy is contracting -- slowing down.

So what have rates been doing? The Federal Reserve raised short-term rates 17 times between June, 2004 and June 2, 2006, and they have remained at that point since then.

Long-term rates, like Mortgage Rates, aren't affected as quickly by economic conditions as are short-term rates, but there is a trickle down factor and they reflect the impact eventually.
Unlike short-term rates, Mortgage Rates typically change daily and as a rule of thumb, bad news in the economy brings on lower rates, and good news makes rates climb.

What is the cutting edge house color? GREEN

What is the cutting edge house color? GREEN

Did you know that the average U.S. home causes twice as much greenhouse emissions as a single car? It’s true. So it shouldn’t surprise anyone that “green” home building is poised to be the next big push in the environmental awakening. “Green” homes or environmentally sensitive housing are already afoot in other areas of the nation and are about to be the next trend here in the St. Charles area.
While some may see this as another politically correct fad, “green” homes offer owners greater durability, less maintenance costs, and lower energy bills than typically constructed houses. “Green” homes may include energy-efficient appliances, water efficient faucets, better ductworks and air filtration systems, and low-emissivity windows (which keep heat from filtering in or out of the windows). Some of the tricks of the trade for “green” home design include using recycled rainwater, solar chimneys, rooftop gardens, geothermal cooling systems, and solar panels.
Commercial construction is ahead of the residential market as far as building “green.” But environmentally-friendly developments are on the rise. Highland Park in St. Charles is touted as Missouri’s first “green” residential community. Its 245 condominiums and town homes are designed with recycled and sustainable materials and energy-efficient systems.
Now, the big question is “What constitutes a ‘green’ home?” Well, it depends on who you listen to. MSNBC reports that there are 80 different local and state “green” building organizations and at least two different national groups promoting their guidelines for constructing “green.” I believe there will soon be a national standard adopted for what qualifies as a “green” home and all these organizations are simply jockeying for their interests to be embraced.
The best-known group in “green” building is the U.S. Green Building Council (USGBC). This non-profit group developed its own point rating system for “green” commercial projects in 2000. Their new construction rating system is based on five categories: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, materials and resources. To find out more about building an environmentally-conscious home visit sure to consult your realtor for locally established ways to go “green” when you are building your new home.