Interest
Interest is defined as being, "The charge for the privilege of borrowing money, typically expressed as an annual percentage rate" (Investopia.com, 2005a). In the first quarter of fiscal year 2002, the U.S. Government dropped the prime rate to historical lows in order to help boost the economy. This was a strong indicator, showing the direction the housing market was heading. The housing industry is very cyclical as it climbs and dives with interest rates and inflation. As interest rates lower, businesses and consumers will take on more projects in the housing markets and borrow more money. Because of lower interest rates, there was a 4.5% rise in existing and new homes sold between 2002 and 2003. (Anari, 2005, ¶ 2) In 2004, consumers refinanced their homes in order to remodel, and/or to pay other consumer debts totally an astounding $300 billion dollars.
Producer Price Index (PPI)
…
