Money, money everywhere ... for now
Why were interest rates in the 1980s so high while the national debt soured, yet at historical low rates today while national debt has also soured in the early part of the 21st century? Apparently, we're a world awash with money.
BusinessWeek's recent cover article covered this phenomenon: http://www.businessweek.com/ magazine/toc/05_28/B3942magazine.htm . The world is flush with money with the aging baby bomers in Japan, the US and Europe socking away all their money for retirement, along with China's citizens saving $$$ as they grow richer. Meanwhile, the U.S. remains the only debt-laiden country - spending billions on things like warplanes and farm subsidies, all financed by the excess liquidity floating out there in the world. So - interest rates have remained low because our U.S. government doesn't need to entice investors to invest with higher interest rates. Right now, there's no other place to put your money!
So, when will this end - and when will the US government be forced to raise interest rates because of the mounting national debt? Well - give it 5 years and by then, retiring western country baby boomers will start taking money out of their 401ks and U.S. bonds and enjoy the fruits of retirement. And by then, interest rates will rise to accommodate our U.S. debt, unless we start preaching a balanced budget (right!).
At the end of the day, this means that there's a limited amount of time when interest rates will stay at such a historically low rates. And that means if you want to re-finance, then you should re-finance soon - before time runs out. To learn more about interest rates - go to http://www.ussavingsnetwork.com/ .