Low Rates

With government spending rejected as a stimulus, Americans have become dependent on low interest rates to revive the economy. But low rates alone cannot expand the economy any faster than the slow pace at which it is now growing.Housing and auto sales have risen as a result of low rates, which make financing more affordable, and retail sales have also benefited. But a wide range of economists, executives and industry experts say that low rates cannot alone squeeze much more out of these key industries, unless obstacles like wage stagnation and high prices of some homes are overcome.

Republicans and Democrats appear to agree on at least one thing: that the United States is facing a STEM (science, technology engineering and math) crisis. In his most recent State of the Union address, President Barack Obama declared that he wants to "reward schools" that focus on STEM classes, for they are "the skills today's employers are looking for to fill jobs right now and in the future. " And as far to the other end of the political spectrum as you can get, Gov. Rick Perry of Texas deemed May 6-12 to be the first ever "Celebration of STEM Education Week in Texas.

Baltimore-area home sales rose 14 percent in September compared with a year ago -- thanks primarily to low mortgage rates, the Greater Baltimore Board of Realtors reported."

We baby boomers get blamed for just about every economic hiccup, because there are so many of us. And our children are particularly furious because they believe the crisis in Social Security, which may affect their ability to retire, can be laid at our feet like kindling for a burning at the stake. They are convinced we boomers, with our outsized appetites and sense of entitlement, are going to consume everything on our way to the cemetery, right down to the amount of ground we leave for those who die after us. But data from the Social Security Administration itself, provided by chief actuary Stephen Goss, demonstrates that boomers are not the pig-through-the-python that we have been described as being.

CHICAGO -- The dramatic rise in U.S. housing starts during February shows that consumers were rushing to take advantage of a relatively low interest rate environment, economists said.Also, good weather conditions and expectations that first-time home buyers may receive tax credits increased demand in the housing industry, they said.The Commerce Department Tuesday said housing starts rose 9.6 percent in February to a seasonally adjusted 1.304 million units, the highest level since March 1990.

WASHINGTON -- For most of this decade, buyers of homes and businesses enjoyed "easy" credit, allowing them to get low-interest loans with few questions asked. Suddenly, credit has become "tight." That means people with spotty credit records are no longer getting mortgages, the largest home borrowers are paying higher interest rates, and some corporate buyouts are in jeopardy. The changes have spooked financial markets, sending the benchmark Dow Jones industrial average last week more than 1,000 points below the record 14,121.

Spurred by attractive interest rates and improved consumer confidence, new-home sales in the Baltimore region were up 16 percent to 2,259 units during the third quarter -- the third consecutive quarterly increase, according to a housing market profile released yesterday by Legg Mason Realty Group Inc."Those low rates are making homes more affordable," said Harvey N. Singer, the group's senior vice president. "People have been wanting to buy houses."The survey, which tracks new-home sales in subdivisions of 20 or more houses in Baltimore and five surrounding counties, showed the biggest growth in townhouse sales, which grew 30.8 percent during the quarter compared with the same period a year ago.Detached-house sales were up 15.5 percent, and sales of multifamily units, such as condominiums, were down 9.5 percent, the survey said.

When it comes to the duration of fixed-income investments, many experts advise investors to keep it short. Interest-rate yields are likely to remain stuck at low levels for a while. Once the economy starts to recover, however, inflation can be expected to revive and bring with it higher interest rates. That's why, experts say, you shouldn't lock in today's rates for too long. "Most people feel - and we agree - that at the back end of this recession there will be pressure on interest rates to move higher," said William Hornbarger, fixed-income strategist for Wachovia Securities.

Low mortgage interest rates and financial assistance packages encouraged homebuying in February, boosting sales in the Baltimore area by 9 percent, the Greater Baltimore Board of Realtors said yesterday.For the month, 852 homes sold, compared with 781 during the same period a year ago. The average sales price fell 4 percent to $118,729, the board said. "The market has remained steady throughout metropolitan Baltimore and is certain to continue in the next months," said Adam D. Cockey Jr., president of the Realtors' board.

Republicans and Democrats appear to agree on at least one thing: that the United States is facing a STEM (science, technology engineering and math) crisis. In his most recent State of the Union address, President Barack Obama declared that he wants to "reward schools" that focus on STEM classes, for they are "the skills today's employers are looking for to fill jobs right now and in the future. " And as far to the other end of the political spectrum as you can get, Gov. Rick Perry of Texas deemed May 6-12 to be the first ever "Celebration of STEM Education Week in Texas.

Coppin State University has a serious problem with very low rates of student retention and graduation. Last December, the University System of Maryland Board of Regents created a Special Review Committee to look into this problem further and make recommendations. This is of special interest to me, as I served as a member of the faculty at Coppin for 12 years, from 1999 until 2011, including service as Faculty Senate president in 2005-2007. Historically, Coppin's core mission has been to provide much-needed access to quality higher education for the citizens of Baltimore City, especially African-American men and women who often must contend with social and economic barriers because of race.

A lifelong Democrat, I now find myself taking issue with the Obama administration in general and Federal Reserve Chairman Ben Bernanke in particular as it pertains to current Fed policy. What seemed to have been a good idea at the onset, to keep interest rates low to stimulate the economy, has been counterproductive and harmful to many of us who need help the most, the retired, the elderly and the poor. The funds this group depends on come mostly from savings. This was the way many of us were directed over time by the prevailing wisdom on how to prepare for the future.

The state's House of Delegates recently passed by a 134-to-0 vote a bill that would make it easier for homeowners to refinance mortgages at today's low rates. The bill, modeled after a law Virginia adopted more than a decade ago, would allow homeowners to proceed with refinancing a first mortgage without permission from a second mortgagor. The process of seeking such approval can be costly, confusing and time-consuming, according to the bill's sponsors. “Too many homeowners struggle to make payments on more than one mortgage,” said Del. Sam Arora, a Montgomery County Democrat who co-sponsored the bill, HB 88. “We have a real opportunity to help them by removing an unnecessary barrier to locking in lower interest rates and stay in their homes.” For the law to apply, the principal of the second mortgage would have to be $150,000 or less.

It's the billion-dollar question for Maryland banks: Do they need at least that much in assets to survive? "Who knows what the magic number is? A billion, $1.5 billion, $750 million?" said Ronald Paul, chairman of Eagle Bancorp, parent of the second-largest Maryland-based bank, with $2.96 billion in assets. "I can tell you it is getting harder and harder for the smaller bank. " Banks of all sizes are feeling more pressure. Profits are squeezed by historically low interest rates meant to spur borrowing, yet loan demand still remains soft.

The new rates for U.S. Savings Bonds are out. And at least the Series I bonds offer a better rate than you get at the bank. Series I bonds purchased this month through the end of April will earn an annualized 1.76 percent for the first six months. Series I bonds are inflation protected. The bond has two rates: a fixed rate for the life of the 30-year-bond and an adjustable rate that goes up and down with inflation every six months. New I bonds carry a zero percent fixed rate, and a 1.76 percent annual rate tied to inflation.

The Bureau of Public Debt announced the new rates on savings bonds. The Series I Bonds purchased today through October of this year will have an annualized rate of 2.2 percent for the first six months of purchase. That compares with an annualized rate of 3.06 percent for new bonds purchased in the previous six months. The I Bond, an inflation protection bond, offers a fixed rate for the life of the bond, and a semi-annual rate that goes up and down based on inflation. The fixed rate is 0 percent.

The state's House of Delegates recently passed by a 134-to-0 vote a bill that would make it easier for homeowners to refinance mortgages at today's low rates. The bill, modeled after a law Virginia adopted more than a decade ago, would allow homeowners to proceed with refinancing a first mortgage without permission from a second mortgagor. The process of seeking such approval can be costly, confusing and time-consuming, according to the bill's sponsors. “Too many homeowners struggle to make payments on more than one mortgage,” said Del. Sam Arora, a Montgomery County Democrat who co-sponsored the bill, HB 88. “We have a real opportunity to help them by removing an unnecessary barrier to locking in lower interest rates and stay in their homes.” For the law to apply, the principal of the second mortgage would have to be $150,000 or less.

Coppin State University has a serious problem with very low rates of student retention and graduation. Last December, the University System of Maryland Board of Regents created a Special Review Committee to look into this problem further and make recommendations. This is of special interest to me, as I served as a member of the faculty at Coppin for 12 years, from 1999 until 2011, including service as Faculty Senate president in 2005-2007. Historically, Coppin's core mission has been to provide much-needed access to quality higher education for the citizens of Baltimore City, especially African-American men and women who often must contend with social and economic barriers because of race.

If you're looking for job security, how about becoming a lawyer or financial analyst? These professions, according to Robert Half International, have lower unemployment rates than the current national average of 8.3 percent. The staffing firm says the unemployment rate in the first quarter was 1.9 percent for lawyers, 3.6 percent for software developers, 3.9 percent for financial analysts, 4.4 percent for accountants and 2.8 percent for human resource managers. (Someone has to be there to lay off everyone else.)

As Baltimore's Public Works Department issues more than $4.2 million in water bill refunds, Howard County officials say they will likely avoid similar issues because of recent upgrades to the county billing system. "We just finished a total upgrade of our water billing system in the last two years; we do not use the same system Baltimore uses," county spokesman Kevin Enright wrote in an email. He said the error rates are now at 1 percent. Water meters are read and transferred electronically using a radio interface.