Unemployment Versus Interest Rates - LoanLove.com Explains How These Two Rates Affect Each Other

SAN DIEGO, July 3, 2013 /PRNewswire-iReach/ -- LoanLove.com has a mission to help consumers and borrowers alike in obtaining the latest information on mortgage lending trends, the real-estate market and the U.S. financial landscape for the purpose of helping them obtain a home loan they love. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals. To fulfill this goal LoanLove.com is continually updating their website with new articles and guides. LoanLove.com continues to help homeowners to understand the real estate market with their new article on unemployment versus interest rates.

The article explains: "It's important to know that unemployment and interest rates are usually inversely related. That means that when unemployment is high the Fed often chooses to keep interest rates low, hoping businesses will find the availability of low-interest loans an incentive to invest in their businesses, which in turn will hopefully increase the number of available jobs and decrease unemployment. Similarly, lower interest rates often result in a higher rate of borrowing – and hence, spending – among consumers; that increase in demand can also cause businesses to hire more workers, again resulting in a lower unemployment rate. Conversely, when the unemployment rate is low, the Fed may move to increase interest rates to avoid inflation."

So, while high unemployment rates can be a drag on the overall economy and are definitely not a good thing, especially those who are experiencing unemployment, for those who are planning to purchase a home or refinance their mortgage the lower mortgage rates that come along with higher unemployment can be a real benefit. The article says: "You can see a recent example of the relationship between unemployment and interest rates in the recent decision by the Federal Reserve Board (or "Fed," if you want to sound cool) to maintain low interest rates following May's rather disappointing unemployment statistics: Rather than decreasing or remaining stable as many experts had predicted, the unemployment rate increased from 7.5 percent to 7.6 percent. The Fed, in turn, decided to keep interest rates at their current low levels – for now."

However, while the Fed has stated that they will keep rates low until the unemployment rates drop to at least 6.5%, this is not written in stone. The Loan Love article warns: "The Fed meets eight times a year, and at any of those meetings the board may decide to increase interest rates with no warning. So what's the lesson here? Never put off until tomorrow what you can do today. There's no time like the present. Strike while the iron is hot (actually, that has to do with shoeing horses and not with interest rates, but you get the idea). In plain, 21st-century English: Interest rates are low now – they may be higher after the Fed's next meeting. To make sure you don't miss out on locking in today's low, low rates, apply for a mortgage or refi ASAP so you can potentially save tens of thousands of dollars over the life of your loan."

For more information on interest rates and other loan news, visit LoanLove.com.

Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, contact@loanlove.com

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SOURCE LoanLove.com



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