Bookshelves are an essential tool in your styling arsenal. Book collections are the no-brainer way to add personality to a room. But sometimes you need a breath of fresh air and this week’s Idea to Steal is just that.
What if, instead a cacophony of random titles, all those different colors and fonts screaming at you, you just turned the spines around?! Suddenly, you have a soft, neutral and monochromatic look.
My dear friend Kirsten of Simply Grove actually caught a ton of flack for this concept when she debuted it back in 2010, but my how things change!
Nearly three years later the look is popping up everywhere. And given that I love pretty much every idea Kirsten ever has, of course, I’m loving this too. In fact, we already tried it in a little corner of the loft. I’ll be sharing a sneak peek on Instagram later today!
What do you think? Are you a fan of the anonymous bookshelf idea?
image 1 piero lissoni showroom // image 2 by joshua simpson for remodelista // image 3 by alexis toureau for maison & deco
Do you remember the excitement of curling up in front of your TV for Saturday morning cartoons, or coming home from school to watch a show you’ve been waiting for all week? If you’re feeling nostalgic, look no further than this blog post. We’re talking about all the shows that were so good that we could watch every episode.
1. Wishbone
Photo Credit: PBS.
One Redditor posted, “Wishbone.”
Another replied, “PBS programming back then was [seriously great]! Watching Wishbone gave me an upper hand in my classical lit course at university. Ghost Writer was also really good!”
One user asked, “Wait? Disney got the licensing for Wishbone?”
One user added, “It was. I was technically ‘too old’ to watch Wishbone (I was in HS when it aired), but I’d watch it when I babysat my brother (who is six years younger than I am), and it was so… adorable. I felt a weird sense of pride that it was filmed in Allen, which was just a short drive (maybe an hour?) from where I grew up in Ft. Worth.”
One replied, “Loved that little dog so much!”
A user said, “I am 51, so I wasn’t exactly a kid when this was on, but I can sing every word of the theme song and own a small Wishbone stuffy.”
2. Batman: The Animated Series
Photo Credit: Fox Kids.
One user shared “Batman: The Animated Series.”
One replied, “Consequently, Superman TAS, The New Batman Adventures, Teen Titans, and Justice League & JL Unlimited. The 90s-2000s DC animation run is one for the ages.”
Another responded, “Justice League was hands down the greatest comic-to-screen adaptation ever.”
“JL Unlimited was outstanding,” one Redditor commented.
One user shared, “90s-2000s DC animation run was great, and those shows, including BTAS, remain my favorites ever since my dad placed them on when I was younger and when they aired on tv.”
Another user replied, “Batman TAS used to come on at 4:30 PM where I lived on weekdays. I can’t tell you how happy and warm it made me to watch that show. It was an escape from a very stressful home. I watched it when I was 4-6ish yo, probably, like in ’93-’94 or so maybe.”
“You’re me, but much younger. I would have been 15 to 16—very stressful home. Batman TAS was a godsend some days,” one user concluded.
3. Batman Beyond
Photo Credit: Warner Bros.
One user added, “AND BATMAN BEYOND.”
Another Redditor added, “Won’t ever argue with someone about BAS being the better one overall, but holy crap, Batman Beyond is still incredibly amazing, and people overlook it so much in favor of BAS. In the very same vein, obviously, Mask of the Phantasm is the better movie overall, but I can never get over just how INSANELY amazing Return of the Joker is. Tim Drake sob/laughing is one of the most full-body goosebumps and heart-wrenching scenes in animated history. And the whole final fight against the Joker was 100% perfect. Joker was losing his cool at fighting a Batman with a Spiderman-style ‘mouth.’”
Another user replied, “Lol yeah, Terry is pretty chatty for a Batman. He got more Bruce Wayne-ish later in the series, but he was still quippy.”
“I did a complete rewatch of this series about a year ago, and except for a couple of episodes here and there, it absolutely holds up,” one user added.
4. Are you Afraid of the Dark?
Photo Credit: Nickelodeon.
One user commented online, “Are you afraid of the dark?”
Another user replied, “Ahh, I loved that show!!! Same with Goosebumps, lol.”
“The episode where the girl is writing ‘help’ on the wall backward scared me a lot as a kid. I still think the imagery was quite haunting for a kid’s show,” one user replied.
Another Redditor added, “Pick the right door, and you’ll go free. Pick the wrong door, and [he’ll] be………”
One user shared, “I can only remember the episode where the one dude attempted to flirt with girls but later is revealed to be a ghost that only his sister could see.”
5. Count Duckula
Photo Credit: Cosgrove Hall Films.
One user commented on the thread, “Probably showing my age here, but there was a show in the UK back in the early 90s called Count Duckula. As a kid, it was enjoyable, but some of the jokes went over my head. ‘Your cousin lives in Spain, m’Lord. He’s sure to give us a warm welcome.’ ‘Oh, he’s a friendly kind of guy?’ ‘No, m’Lord, he’s a pyromaniac.’
Another user replied, “This is the one where he’s a duck vampire but only eats vegetables?”
One user replied, “They used to show this at 5 AM on Saturday morning in America when I was a kid, I still remember the song. ‘From the halls of Transylvania / There’s no one more insane. / Dun dun dun da da da / DUCKULA’ Well, I kind of remember it.”
6. Duck Tales
Photo Credit: Disney.
One Redditor commented, “Duck Tales(1987).”
Another user exclaimed, “OoOooh!”
One commenter replied, “‘Racecars, lasers, aeroplanes.’”
Another added, “‘It’s a duck-blur!’”
One user replied, “I can hear it in my head, lmao.”
7. Looney Tunes
Photo Credit: Warner Bros.
“Looney Tunes. I still laugh off watching them,” one user posted.
One replied, “They are where most people my age (69) first heard classical music. The Boston Symphony Orchestra used to run an instrument petting zoo every year, and they played Looney Tunes cartoons in Symphony Hall non-stop all day.”
Another user stated, “The Indianapolis Symphony did a performance of “Bugs Bunny on Broadway. They showed the cartoons on a movie screen while the Symphony played the soundtrack! It was SO much fun.”
One user added, “My favorite all-time bugs bunny line is right after he finishes destroying a man’s bagpipes thinking they were the Loch Ness monster. ‘Well, he put up a good fight. But clean livin’ prevailed.’”
8. The Muppets
Photo Credit: ABC Studios.
One user commented, “The Muppet Show and Fraggle Rock.”
Another user replied, “The Muppets aren’t for kids. They’re for everybody.”
“Fraggle Rock was on HBO, wasn’t it? It was forbidden to all those who didn’t have a rich friend,” one commenter replied.
Another user commented, “LOVED the Muppet show! Statler and Waldorf were the bombs! Saturday morning cartoons were Hong Kong Phooey.”
One Redditor added, “The Swedish Chef herdy gurd gurd herdy bork bork!”
“And Dr. Bunsen Honeydew and Beaker MEEP MEEP MEEP MEEP…. we could do this all day because the whole show and all the characters are awesome!” another user said.
9. Gargoyles
Photo Credit: Disney.
One user shared, “Gargoyles.”
A user replied, “Did a rewatch when Disney+ started up. Very rewarding.”
One added, “Up until the boat episodes…it became such a slog around then.”
One user also added, “‘Avalon doesn’t take you where you want to go, AVALON SENDS YOU WHERE YOU NEED TO BE!’ Ugh that entire bit, like 20 [whole] episodes, is nothing but filler.”
10. Animaniacs
Photo Credit: Warner Bros.
One Redditor posted, “‘Wheel of morality turn turn turn tells us the lesson we must learn.’”
Another replied, “‘If at first, you don’t succeed, blame it on your parents’ even as an adult that makes me giggle. Edit: and winning the trip to Tahiti.”
One commenter added, “‘Lake Titicaca, oh lake Titicaca, it’s between Bolivia and Peru. Lake Titicaca, yes lake Titicaca, with waters tranquil and blue. Lake Titicaca, oh lake Titicaca, why do we sing of its fame? Lake Titicaca, yes lake Titicaca: ’cause we really like saying it’s name! Titicaca!’”
11. The Magic School Bus
Photo Credit: PBS Kids.
One user shared, “The Magic School Bus!”
Another added, “‘I knew I should have stayed home today!!’”
Another user replied, “‘With the Frizz??’”
One commenter exclaimed, “‘NO WAY! aaaaaaaAAAAAAA’.”
Another replied, “‘Cruising [on] down Main Street.’”
12. Teen Titans
Photo Credit: Warner Bros.
One user shared, “Teen Titans.”
Another user replied, “The old one, not the new overly cartooned characters.”
Another responded, “I do believe that one’s called ‘Teen Titans Go’.”
One user commented, “I think I’m the only person who likes the original and Go.”
Another added, “Honestly, I like it too. It has its own charm. I just see them as alternate universe versions of the first show characters.”
One also commented, “They’re both great, for different reasons. The original for the stories and action. Go! For the comedy.”
Another user shared, “Just introduced my son to this. He was addicted to Teen Titans Go but now prefers this and wants to know why it changed lol.”
13. Recess
Photo Credit: Toon Disney.
One user posted, “Recess.”
Another user replied, “The episode about stickers was making fun NFTs long before they were even a thing.”
One person responded, “That episode whomps.”
One user added, “This is literally the only show on TV at my house ever since it went up on Disney plus, it’s the best show in terms of nostalgia for me, but I believe no other show quite captures the mind of children better than it. All the rumours, the secrets, the relatable boredom, takes me back to my childhood with each episode!”
Another person stated, “I watched this as an adult and loved it. I’m constantly looking for the Ashleys in my workplaces, lol.”
14. Hey Arnold
Photo Credit: Snee-Oosh, Inc.
One user commented, “Hey Arnold.”
Another poster wrote, “Watching it as an adult… it’s bittersweet because I watched it all the time as a kid but, man they really have some ‘hidden gems’ in there kid. I definitely didn’t understand.”
One commenter added, “The episode where the popular cool girl goes home and her dad is crying about eating their last can of soup is forever in my brain. And the episode where he teaches one of his adult neighbors to read. ‘LOOK I am petting the kitty!’”
Another replied, “Far too many real, legit situations in that show that were just casually thrown around and us kids just thought it was hilarious. I need to watch the show again at my own risk. I feel incredibly sad for Helga now that I’m older.”
15. Rocko’s Modern Life
Photo Credit: Nickelodeon.
One user shared “Rocko’s Modern Life.”
Another added, “I loved this show as a kid. As an adult, my thoughts are, this show is really weird and I can’t believe I watched it as a kid. I still love it lol. Similar to Ren and Stimpy.”
One Redditor responded, “Yes! This is my pick as well! It gets even better as an adult with all the innuendos!”
Another exclaimed, “‘Oh baby oh baby oh baby.’”
One user responded, “‘Rocko?!?!’”
Source: Reddit.
Image Credit: Shutterstock – Denis Makarenko
Who is one actress you can never stand watching, no matter their role? After polling the internet, these were the top-voted actresses that people couldn’t stand watching.
10 Actresses People Despise Watching Regardless of Their Role
These 7 Celebrities are Genuinely Good People
Photo Credit: Shutterstock.
We’ve all heard the famous adage that “no publicity is bad publicity,” and while it tends to be accurate, there are certainly exceptions. But what about those few stars who stay out of the limelight and get along without a hint of trouble?
These 7 Celebrities are Genuinely Good People
Photo Credit: Shutterstock
Have you ever known someone and thought you liked them—until you learned about their hobbies? Then you get to know them and then you’re like, “Wow, red flag.” Well, you’re not alone.
These 10 Activities Are an Immediate Red Flag
Photo Credit: Shutterstock.
Some celebrities definitely seem to enjoy the limelight and keep working to stay in the public eye. While others quickly move out of the spotlight. Many of these actors and actresses stepped out of the spotlight to live a more private life without constant media pressures.
10 Celebrities That Made the Big Times Then Disappeared Off The Face of the Earth
Image Credit: Troma Entertainment
We’ve all been there – sitting through a movie that we can’t help but cringe at, but somehow it still manages to hold a special place in our hearts.
These 10 Terrible Movies Are Still People’s Favorites
Over the past couple of weeks, I’ve laid out three steps to help you build a hassle-free money management system:
How to manage your spending without a traditional budget.
How to create a bank account buffer™ to eliminate the risk of overdrafts.
How to put your bills and savings on autopilot.
What I’ve written is incomplete, however, without one piece of the puzzle: an automatic investment plan.
Arguably, putting your investments on autopilot is the most important thing you can do for your finances.
If you don’t want to automate the rest of your finances—if you prefer to set aside a few hours a month to pay bills, transfer money to savings, and balance your checkbook, that’s fine. Some people will sacrifice time for that kind of control. But you should still consider setting up automated investments.
Investor and financial author Robert G. Allen sums up the biggest reason:
How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
Many of us delay investing (or fail to start at all) because we’re either intimidated by choosing investments or we’re afraid of the risk. An automatic investment plan can help. One of the techniques I outline here requires zero investing knowledge to get started—it’s as easy as opening a bank account. And, when you put your investments on autopilot, you take your emotions out of investing, which can temper your fear—or at least limit fear’s ability to cost you money. Let’s look at how an automatic investment plan does this.
The technique of buying a fixed amount of an investment at regular intervals is known as dollar cost averaging (as opposed to investing a big chunk of money at irregular times).
If you were to buy $1,000 of a mutual fund when it’s per-share price is $100, you would own 10 shares.
If, however, you invest $100 a month for ten months and the fund’s price varies from $80 to $120, you may end up slightly more or less than 10 shares depending on the stock prices. As the market climbs, the notion is you will end up buying more shares at a lower price than if you invested in a lump sum. Advocates of dollar cost averaging say this reduces risk, but critics disagree. The market goes up in the long run, so you want to get money in as soon as possible.
If you have a lump sum sitting around that you want to invest, then do it. Get it into the market and don’t worry about spreading it around and definitely don’t try to time the market or wait for the right time.
For the rest of us, an automatic investment plan makes sense for two reasons:
On a street corner near our house is a store called The Dig, which advertises “most clothes $3 – $4 – $5”. Many of these are items of the latest fashions, which have been rejected for whatever reason. Clean and organized, the store also has dressing rooms, something many thrift stores lack. I used to mock Kris for going to The Dig. It looked like a dive. Then I joined her for a trip a couple of weeks ago — now I’m a convert.
I buy most of my clothing at one of two places: Costco or the local thrift shops. It makes me wince to pay more than $20 for a piece of clothing. (Unless it’s something top quality, like a Filson jacket, in which case I’ll gladly pay $150.) Costco has styles I like, but the selection is limited, and the prices are three times those at thrift stores. Thrift stores have a huge selection, but the garments are often flawed. And to find anything good, you have to sort through tons of junk.
Used clothing stores like The Dig are a compromise. The prices are better than at Costco. The selection isn’t as wide as you might find at a thrift store, but the quality is generally better. Here are some tips about shopping for second-hand clothes. (Kris gave a lot of help with these.)
Set a budget. This is difficult at first — you don’t know how much things cost. But eventually you’ll be able to tell yourself, “I’m going spend $20 today”. It becomes a game to see how much you can buy for $20.
Discard your prejudices. Some people consider thrift stores and used clothing shops nasty dirty places. Some are. Most aren’t. Explore your neighborhood. Find a shop or two that you like, and you’ll be hooked. (My mother-in-law was nonplused when we shopped for used clothes on our San Francisco vacation, but even she became excited when she found a new pair of her favorite Birkenstocks — in her size! — for just $8.)
Go with a friend. It’s good to have a second opinion. Your friend may have an eye for what looks good on you — and vice versa.
Try things on. Sizes vary widely between manufacturers and even by eras. (Today’s clothes have looser fits.) But go in knowing your general size and measurements. Note that some places don’t have dressing rooms, so it’s smart to wear a modest thin layer in case you need to strip down in the aisle.
Examine each item thoroughly. It sucks to get home to find your new shirt has a hole in the pocket. Or that the slacks you thought were a steal actually have a broken zipper.
Check washing instructions. You don’t want to pay $3 for a silk blouse if you’ll never dry-clean it.
Use the tags as a guide to find quality brands you like, but don’t limit yourself. Sometimes a brand you’ve never heard of can yield a favorite piece of clothing.
Think layers. Maybe that shirt with a stain on the sleeve has a great collar for wearing under a sweater. For $3, you can afford to buy a single-purpose shirt.
Use thrift stores as a way to diversify your wardrobe. Buy colors and styles on which you normally wouldn’t spend much. Wear the new clothes a few times to see how you like them, and to gauge the reaction of others.
Used clothing stores are great for certain accessories. Why pay $30 for a new belt in a department store when you can get a better belt in your size for just $2? I like to shop at second-hand stores for hats. (Nice hats.)
Look for clothes new with tags. Sometimes unsold department store inventory finds its way to used clothing stores and thrift shops. You’ll generally pay more for these items, but not much.
If you won’t wear it, don’t buy it. You don’t save money buying a $3 shirt if it just sits in your closet for two years.
Wash clothes when you get them home.
Watch for sales. Used clothing stores (and thrift stores) run periodic specials. Our favorite local store just ran a half-off sale. The local thrift stores often have specials on certain items.
If you go to the same store often, ask when they rotate stock. Stores get new shipments regularly. Most also have extra stock in storage. If you become familiar with the owners, you might even ask them to keep an eye out for particular items.
If buying used clothes becomes a habit, institute a “one in-one out policy”. Every time you bring home something new, get rid of something old. (Give it away, take it to a thrift store, or save it for a garage sale.)
Have fun! Buying used clothing can save you money. It’s also a fun way to kill a Saturday afternoon. At $3 an item, you can afford to be adventurous sometimes.
Used clothes shopping isn’t just for women. Men can find some fantastic deals, too. I hate to shop for clothes in department stores, but I love the adventure of buying used clothes. Don’t dismiss the idea out of hand. Good second-hand stores aren’t smelly, dirty, or scary — they’re just great places to find bargain clothing.
I don’t like credit cards. Many smart people — including my wife — use them wisely and never have problems. I’m not one of those people. Most of my money woes stem from credit card debt acquired when I was first out of college. Eventually I wised up — I have not carried a personal credit card in more than five years.
NCN at No Credit Needed has posted a detailed list of the reasons he does not use credit cards. He writes:
I have not used a credit card in over two years. So far, I have yet to find myself in a situation where I had to use my credit card. (I still have one, active, credit card account. I keep my card tucked away in my wallet. I’m not sure it actually works anymore. I do not plan to find out.) I do not advocate closing credit card accounts. I have an account that is open and in good standing. I just don’t use it. What have I learned about NOT using my credit card?
Among the lessons NCN has learned:
Spending cash hurts more than swiping a card.
If you don’t use your card, you don’t get a bill.
He doesn’t care about missing cash-back bonuses or card rewards.
He can use a debit card in nearly every place a credit card would work (including car rentals and hotel reservations).
I, too, have suffered no adverse effects from giving up personal credit cards. It helps, of course, that I use a debit card. I also carry a couple of business credit cards, but I have no problem using them responsibly. Business is business, and is completely separate from my personal life.
I’ll admit that I’ve considered trying to use credit cards once more now that I seem to have developed a solid understanding of personal finance. Ultimately, however, I’ve decided the rewards are minimal and the risks too great. For now, I’m credit card-free and proud of it.
There are some things that even the most reputable lenders don’t really want to advertise. Here are 3 your lender probably doesn’t want you to know.
1. Just because you’re approved for it doesn’t mean you should spend it
Getting pre-approved or pre-qualified jumpstarts the loan process and gives you a maximum loan amount to use as a guide while shopping. Though it’s the industry standard to base that estimate on a your current debt and income, there’s no way for lenders to take into account other costs that add up, like childcare, utilities, food, travel expenses, and so on.
By maxing out your loan without doing your own math first, you run the risk of ending up house poor and financially overextended.
2. There’s no such thing as “no closing costs”
Closing costs are how lenders pay for the labor involved in reviewing and underwriting a loan—and no lender is going to do that work for free. When you see “no closing costs” advertised, keep in mind that a more accurate description might be “no closing costs upfront.”
While you won’t have to pay out of pocket at the closing table, your closing costs will either be rolled into the loan amount or paid for bit by bit via a higher interest rate.
3. Your loan will probably be re-sold as soon as you close
Most loans these days are re-sold to government and private investors on the secondary market, and regardless of what your lender tells you, there’s always a chance your loan could be one of them.
Even though reselling sounds unappealing, in most cases it’s really in the borrower’s best interest. Most local and mid-sized lenders focus their energy on the application, underwriting, and approval process and simply don’t maintain the staff needed to service loans month-to-month, which can lead to less-than-optimal customer service.
Fitch’s recent lowering of Fannie Mae and Freddie Mac credit ratings following an earlier U.S. downgrade highlights some considerations related to whether they should eventually be removed from conservatorship.
For one, as much as the downgrades may not reflect well on the public ties the government-sponsored enterprises have, the rating actions suggest those links still beat the alternative for the GSEs.
“The implicit government support is still the driver of the ratings, and the GSEs would be rated lower without it,” said Eric Orenstein, senior director in Fitch’s nonbank financial institutions group.
So while the earlier lowering of a U.S. sovereign rating did hurt Fannie and Freddie’s equivalents for long-term issuer default, senior unsecured debt and government support, their public ties are still considered a relative positive.
That dichotomy is in line with the fact Fannie and Freddie’s mortgage-backed securities aren’t normally rated because of their government-related support, fueling debate about the extent to which downgrades influence a bond market that drives borrowing costs.
“There’s really not an official rating for the MBS, so the assumed rating is whatever the Treasury is rated,” said Walt Schmidt, senior vice president, mortgage strategies, at FHN Financial. “From that standpoint, I don’t think this has a direct effect.”
And while Fitch said the U.S. has seen “a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters,” Freddie and Fannie’s financials are strong, suggesting they’re not immediate taxpayer risks.
Fitch confirmed it “does not rate any MBS products directly issued by the GSEs.” If they did, those securities would theoretically have a rating that matched Fannie and Freddie’s long-term IDR.
However, the credit risk transfer securities the GSEs use to sell off some of their risk to private-label investors based on reference pools of their loans do get rated. Fitch lowered the ratings of 435 of these. Only those with top ratings were impacted.
Fitch groups Fannie and Freddie’s CRTs with non-agency residential mortgage-backed securities, but otherwise securitization ratings that it considers to be part of the private market weren’t affected.
While some GSE and United States ratings are now one-notch down from the highest possible grade, they have generally remained at the upper end of the scale. Also, Fannie and Freddie’s short-term issuer default rating remained unchanged at the highest rating. (In addition to Fannie and Freddie, Fitch also had downgraded the Federal Home Loan Banks of Atlanta and Des Moines at press time.)
Fitch’s downgrade of Fannie is “not being driven by fundamental credit, capital, or liquidity deterioration,” the GSE said in an emailed statement sent in response to inquiries about the rating actions, echoing some of the wording Fitch used to describe both enterprises.
Fannie and Freddie’s regulator, the Federal Housing Finance Agency, issued a similar statement, while adding that, “As no one can predict future outcomes, FHFA is carefully watching the ratings downgrade to assess its impact on the MBS markets and the GSEs.”
There has been disagreement among rating agencies related to U.S. sovereign rating. Kroll Bond Rating Agency and Moody’s Investors Service, in contrast to Fitch, reaffirmed top ratings for the United States on Thursday.
But while disagreement among rating agencies and other aforementioned factors do blunt the impact of the Fitch downgrades on the mortgage market, it may not be entirely immune to them.
There might be an impact on Fannie and Freddie’s unsecured debt in particular given the change in that rating and the fact that they’re more reliant on it because those bonds are not backed with mortgage collateral the way agency MBS are.
And while there’s some disagreement on this point, even agency MBS could be at least peripherally affected by the downgrades in ways that could put upward pressure on financing costs, depending on whether other rate drivers outweigh them.
“I think there is an indirect effect in the whole downgrade story. It perhaps has contributed to slightly higher yields, but there are a lot of cross currents in the market,” Schmidt said.
The Federal Reserve left its overnight lending rate unchanged on Wednesday, and said it expects to keep interest rates low until labor market conditions and inflation hit the Federal Open Market Committee‘s standards of maximum employment and inflation moderately exceeding 2% for some time.
“Our guidance is outcome-based and is tied to progress toward reaching our employment and inflation goals. Thus, if progress toward our goals were to slow, the guidance would convey our intention to increase policy accommodation through a lower expected path of the federal funds rate, and a higher expected path of the balance sheet,” Fed Chairman Jerome Powell said in press conference on Wednesday.
According to the FOMC, the path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term, the committee said.
The committee reiterated its commitment to purchase mortgage-backed securities and Treasuries to support the flow of credit – increasing its holdings of Treasury securities by at least $80 billion per month and agency MBS by at least $40 billion per month.
Overall, Fed purchases have helped to drive mortgage rates and other loan interest rates to the lowest level on record by boosting competition for bonds, which compresses yields.
“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the statement said.
Following the release of the Fed’s intention to keep short-term rates at zero for the foreseeable future, Mortgage Bankers Association chief economist Mike Fratantoni said the MBA fully expects the Fed to maintain low interest rates at the zero level bound for years to come.
“While the Fed has been clear regarding their plans for the federal funds target, they had been less so with respect to asset purchases. Today’s announcement provided a further commitment that they would continue to purchase Treasuries and MBS at the current pace until there’s ‘substantial progress’ towards a stronger economy. With the vaccine distribution commencing, we are hopeful to see such progress over the course of 2021,” Fratantoni said.
Fratantoni also said the Fed has now provided assurance that supportive policies will remain in place, and there is hope that an additional fiscal stimulus package will soon be passed .
The FOMC also released projections from FOMC members, which on average estimated unemployment to fall by nearly half by 2023. They also predict that real GDP will rise to a peak in 2021 before leveling off and perhaps heading downward through 2023.
In Wednesday’s press conference, Powell said that it’s going to take a while to get inflation back to 2% in the latest crisis.
“We’re honest with ourselves and with you…but even with the very high level of accommodation that we’re providing both through low rates and very high levels of asset purchases, it will take some time,” Powell added.
In a press conference following the last FOMC meeting in mid-September, Powell said more stimulus is needed from Congress to help an economy struggling with the COVID-19 pandemic.
“It can be easy to think that the decisions made by central banks don’t impact the daily lives of normal people, however, the reality is they’re very much likely to,” James McManus, chief investment officer at Nutmeg, told CNBC Make It.
Damircudic | E+ | Getty Images
The U.S. Federal Reserve, euro zone’s European Central Bank and U.K.’s Bank of England have all announced monetary policy moves in recent weeks — and interest rates have once again taken center stage.
The world of central banks and their policies, which include interest rates, may seem abstract — but they affect everyone.
“It can be easy to think that the decisions made by central banks don’t impact the daily lives of normal people, however, the reality is they’re very much likely to,” James McManus, chief investment officer at Nutmeg, told CNBC Make It.
On a very basic level, interest is charged when you borrow money, and paid out when you save money. Interest rates — the rate at which you are charged or rewarded — are set by central banks, like the Fed or Bank of England.
These central banks often raise rates in an effort to cool inflation, and then cut them when inflation is closer to their target. A shift in interest rates affects retail banks and lenders, which then pass them on to consumers.
Pros and cons
How consumers are affected by interest rates varies according to whether rates are higher or lower.
“As a rough rule of thumb, when rates are high, the banks will charge us more for borrowing, and pay a better return on savings. When rates are low, borrowing gets cheaper, but saving gets less rewarding,” Sarah Coles, head of personal finance at Hargreaves Lansdown, told CNBC Make It.
“Borrowing” includes mortgages, student loans, credit card repayments and more. Having higher interest on these payments ultimately means they cost you more.
A real-life example of this is playing out in the U.K., where an ongoing mortgage crisis saw mortgage rates hit a 15-year high in July. Many homeowners are unsure if they can afford the higher payments, while prospective buyers are being put off by the higher cost of borrowing.
This is to be expected, said Russ Mould, investment director at AJ Bell.
“Interest rate rises are supposed to hurt by raising interest bills on mortgages, car loans, credit cards and other finance for borrowers, as those higher bills crimp cash flow and disposable income,” he said.
On the flip side, higher interest rates can boost your savings, Mould added.
“They are, however, potentially good news for savers, as they should, in theory, get higher interest on the cash they have in the bank. That will boost their spending power,” he told CNBC Make It.
Interest rates versus inflation
Interest rates often go hand in hand with inflation (rising prices). Central banks hope that higher interest rates will help bring prices down.
“The theory here is that if more money is spent on borrowing (such as mortgages) and saving is more appealing, people will buy less – therefore reducing demand,” McManus said. “As demand reduces, prices should come down to encourage competition for the reduced level of demand.”
Falling prices might sound like good news, especially in the context of the ongoing cost-of-living crisis.
But interest rate hikes from central banks around the world have also triggered fears of a recession and job losses — both of which are linked to the economic slowdown brought on by higher rates.
Despite these risks, higher inflation can be even more damaging, according to Mould.
“High inflation has not been an issue since the early 1980s so many will have forgotten – or never encountered – its ravages,” he pointed out.
“It does far more damage to far more people that higher interest rates because it hurts the value of everyone’s money by reducing its purchasing power and it affects those who are least well off the most.”
How worried should you be?
Ultimately, the question of how people will be affected depends on their individual situations, Coles said. For example, those with large mortgages will likely be more severely affected by high interest rates, she added.
“However, for someone with no mortgage, inflation feels more painful, and for someone with plenty of savings, higher rates are a bonus,” she said.
Although central bank monetary policy decisions affect everyone’s life in one way or another, it’s important not to worry too much about them, according to McManus.
“Central bank monetary policy goes in cycles, there will be times when interest rates are higher and times when they are lower, the most important thing can often be to plan ahead for both scenarios,” he added.
Some good news finally came out of Las Vegas today, and I’m not talking about someone winning a mega jackpot on an oversized one-armed bandit.
During the Mortgage Bankers Association’s Annual Convention in Sin City, it was revealed that Fannie Mae and Freddie Mac will again accept mortgages with as little as three percent down.
This is a reversal to an earlier policy change whereby the pair stopped buying loans with down payments of less than five percent.
In fact, about a year ago Fannie Mae reduced its max loan-to-value ratio (LTV) from 97% to 95%, forcing those with little in assets to consider the FHA.
Mel Watt Finally Comes Through
Earlier today, FHFA chairman Mel Watt told conference attendees in prepared remarks that the agency is working with Fannie and Freddie “to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent.”
This is after months of him doing absolutely nothing since taking the job, at least as far as the public could see.
While the specifics are unclear, he did say such lower-down payment mortgages would take into account “compensating factors,” which are generally things like a good credit score, solid job history, low DTI ratio, and so on.
So you’ll actually have to be a good borrower to get a conventional loan with just three percent down, unlike the FHA, which allows 3.5% down with really low credit scores.
The change comes at a time when “access to credit remains tight for many borrowers,” per Watt, though that issue is certainly debatable.
However, it is intended to allow lenders to “more aggressively make responsible loans available to creditworthy borrowers.”
Less Liability for Mortgage Lenders
He also told the crowd that the FHFA was actively working to refine the Representation and Warranty Framework to ensure lenders know the loans they sell to Fannie and Freddie won’t face costly repurchase risk.
Because of the continued uncertainty regarding buybacks, banks and lenders have instituted overlays as a buffer above what the pair allows to avoid any unintended costs.
Unfortunately, it is consumers who pay for this in the way of higher mortgage rates, or worse, flat out denial.
This area of mortgage reform has been a work in progress with more and more refinements being released to provide better clarity. Watt hopes to make things very clear so lenders can offer seemingly higher-risk loan products with a lower level of liability.
While this will be welcome news for borrowers struggling to come up with the necessary funds to buy a home, there are lenders already offering conventional loans with 3% down.
For example, TD Bank offers LTVs up to 97% without private mortgage insurance. Some community banks and credit unions also offer similar low-down payment loans.
Of course, the interest rates are probably higher on such specialty offerings, and likely more restrictive than what Fannie and Freddie will soon allow.
So borrowers should be able to get low-down payment loans at a reasonable price once again, which should boost lending and overall homeownership.
The worry is whether we’re wading back into the deadly waters that created the housing crisis to begin with. But affordable housing goals call for such loosening, whether well intentioned or not.
Perhaps the move will force the FHA to lower mortgage insurance premiums, which are now sky-high and highly unattractive to just about everyone.