Fed Chair Ben Bernanke visited Congress last week to talk economic policies that could certainly have an impact on many New Yorkers' wallets. NY1's Tara Lynn Wagner filed the following "Money Matters" report.
When Federal Reserve Chairman Ben Bernanke speaks, Huffington Post financial writer Mark Gongloff listens and he says you should too.
"Bernanke in case you don't know, he's the second or third most important man in the world because he controls all of our money," explains Gongloff.
During the recession he and the U.S. Federal Reserve made borrowing money easier by keeping interest rates exceptionally low -- almost at zero -- and by purchasing massive amount of bonds but recently they hinted that the financial winds may be changing.
They said sometime in September we might start slow down doing this. We might stop altogether by mid next year. And the bond market and the financial markets generally just freaked out about it. 'They said, 'No, no don't take away our free money.' And so what's he's been trying to do in recent weeks is saying, 'No, no I'm not trying to take away the free money. I'm just trying to take my foot slightly off the gas,'" says Gongloff.
But even the slightest movement of his foot can cause an economic bump in the road -- a road that leads straight to your wallet. Over just a few weeks, interest rates shot up roughly a full percentage point from around 3.5 to 4.5 percent. In a Senate hearing Bernanke acknowledged the rate increase adding, "Although I would emphasize they remain relatively low."
"If you go back to when I bought my first home interest rates in 1984 were 13 and three quarters percent. Yes rates are higher than they were in the recent past, but they're still at historically low rates. This is a great time to buy a home, to invest in real estate," says ConnectOne Bank Chairman and CEO Frank Sorrentino.
Now is also the time to refinance because experts agree that while rates seem to have stabilized for now, ultimately they will move higher.
"Although, I think it'll take a while and it will happen slowly, but I can't predict. But, now is a good time, now is a good time to fix your rate," notes Sorrentino.
"The economy is still very, relatively weak," adds Gongloff. "It’s still struggling a lot to come back. And the Fed is going to keep its shortest term interest rates at zero. And the longer term interest rates are sort of built off the shorter term rates so I don't think we are going get to six or seven percent mortgage rates any time very soon barring some amazing comeback in the economy which nobody sees right now."