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Show The Salt Lake Tribune BUSINESS Wednesday, -CONSUMER CORNER eee 1SLALLIIELFi Sssss aaa 30, 1998 CENTERPIECE Refinancing Frenzy Greets Fed’s Decision Butfor retirees who help support themselveswith interest income,rate decrease has its share of drawbacks *Highway-Safety Groups Take Aim at Retreads BY MELISSA eres andJOHN SCHME CHICAGO TRIBUNE Like a lot of WASHINGTON — Highway- + : safety groups, concerned about traffic hazards, want regulators to restrict the widespread use of retread tires on heavy commercial trucks. Federal law limits passenger | balding tires capped with new | ' cars and most trucks from using + treads, but a loophole bans re- treads from only front axles of | "heavy trucks. Critics say chunks of ‘ retread rubber flying off speeding ‘ big rigs threaten the safety of other | motorists. “Make no mistake, retreads are ! : ; | | i ‘ dangerous,” said Gerald Donaldson, senior research analyst for Advocates for Highway and Auto Safety. “They frequently explode while trucks are rolling, compromising truckers’ ability to handle these enormous rigs.” : Congress Votes to Cut : Student-Loan Interest WASHINGTON — The millions of students who borrow moneyfor college will pay less interest because of a higher-education bill that cleared Congress on Tuesday. President Clinton said he wil sign thebill, which also raises the ceiling on grants and work-study for needy students. He urged Con- gress to enact separate legislation needed to pay for the increases as well as other programs authorized in the bill. Besides providing more student aid and streamlining its delivery, the five-year reauthorization of higher-education programs takes steps to improve teacher preparation, monitor college costs, report campus crimes, monitor hate crimes and discourage drug oral- cohol abuse. GMWill Offer Vehicles Via the Internet by ’99 General Motors Corp.is creating a computer database that will Mortgage Rates at 30-Year Low nance his house — in his case, for the second time in 16 months. The executive at Chicago advertising agency Foote, Cone & Belding has carried that intention further than most — literally. He oe March 24: % papers around in his briefcase, waiting for the right e% “Everything's done. All I've got ™% refinanced his English Tudorstyle home in Mount Prospect, TIL, last year, when he switched from an ite mortgage to a 7.75 percent fixed-rate mort- 6% 0%’ Source Freddie Mac gage. To a large degree, Maher has been waiting to refinance again because he wanted to see if the investment-counseling firm. Frontsaid consumers would see a substantial benefit from lower to sign them and makeitofficial. to dois lock in,” said Maher, who Federal Reserve's policy-making committee would act to lower rates whenit met Tuesday.It did, cutting the so-called federalfundsrate, a benchmark for other short-term rates, by 0.25 percentagepoint, to 5.25 percent. The rate cut is good news for borrowers, who will see lower rates on credit cards, auto and home equity loans. Commercial loan rates will drop as well, as banks lowertheir prime, or base, rate to reflect the Fed’s reduction. But falling interest rates are bad newsfor retirees who depend oninterest incometo live. Andthere is no guarantee that mortgage rates will drop much following the Fed’s action, becausethey are so low already. Chicago-based George. XMISSION Utah clients. Oo 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Janet Loehrke, Gannett News Service home-equity loan and credit-card rates only if Tuesday's quarter- percentage-point rate cut is followed by a similar one in eight weeks, after the next Fed policy meeting. “In order for there to be an impact, the cut has to be part of a larger series of moves. The Fed has madea signal. They're facing away from the inflation issues that[have] preoccupied them for ie year. Now lotwill depend upon what happens with the economy and what Japan does,” Frontsaid. For consumers whose loan rates do fall, the savings will be meager. If new-car loan rates fall from the current 8.8 percent to about yearlife of the loan, according to a savings of $55 during the four- theloan. Onthe other hand,the rate that banks pay on certificates of de- posit (CDs) and passbook accounts will fall faster. A one-year, $10,000 CD would earn $20 less annually due to the lower rates. In fact, many banks have been trimming CDrates in anticipation of the Fed rate cut. Last week the national CD index fell 0.04 percentage point in this year. Last year, there were 2.4 million refinancings national- 1ly. But for many seniors who live on Social Security supplemented Mortgagerates nationally have could be protected if the Fed is successful at bolstering the U.S. economy andkeepinginflation at bay. “Clearly, older persons who tor. also been falling without action from the Fed, reaching a 30-year low last week of 6.64 percent for 30-year fixed-rate loans, according to a survey by Freddie Mac, an agency that buys and securitizes mortgages. If mortgage rates do fall fur- ther, economists say, it will be due less to the Fed than to market People carrying a $3,000 bal- bond down to a record low 5.09 save only $7.50 annually, he said. percent Tuesday from 5.14 percent late Monday. It thus contin- $20,000 home equity loan would save only $88 during thelife of course to reach a record 7 million by little interest income, the forces, which Tuesday pushed the And a family with a five-year, gage refinancings, which are on the one-year CD and 0.07 percentagepointin the five-year CD, according to Sara Campbell, senior vice president of Bank Rate Moni- Robert Heady, founding publisher of Bank Rate Monitor. ance on their credit cards would is for overnightloans. Regardless of whether mortgagerates fall,all the talk about the Fed loweringrates is expected to fuel an ongoing boomin mort- yield on the 30-year Treasury ues the unusual circumstance of the 30-year bond'syield being below the federal-funds rate, which rate cut is a mixed blessing. Ontheone hand,they will have less to live on, but the purchasing powerof the money they do have rely on interest for part of their income benefit when interest rates are higher,” said Martin Corry, director of federal affairs for the American Association of Retired Persons, noting that 40 percentof retired Americans live solely on Social Security supplemented by the interest they earn on a small bank account.“Butit is far more important to older persons that the Fed stabilize foreign economies and continue to provide for a healthy U.S. economy.” make it easier to buy a new GM vehicle using the Internet, beginnext year. The automaker released details Monday about its Web site, GM BuyPower.It will enable consumers throughoutthe nationto find a _ Vehicle with the options they want, schedule a test-drive at a nearby dealership and obtain the dealer's price through the Internet. An array of automakers and en- trepreneurs are trying different » ways to furnish information about vehicles to computer-savvy consumers on the Internet. These = a usually list the retail price, but the semper must negotiate the final price with a dealer. GM has tested its system for the last year in California, Idaho, Oregon and Washington. Microsoft Seeks Authors’ Taped Interviews With Competitors for Use in Trial BY ERICA NOONAN ‘THE ASSOCIATED PRESS BOSTON — Less than three weeks before its antitrusttrial in Washington, Microsoft Corp. is scrambling to uncover evidence that could help it defend itself against the government. Microsoft has subpoenaed professors from Harvard University Michael CusumanoofMIT refuse to hand over recorded interviews and documents. collude illegally with rivals, also wants to show that other high- The authors gathered their in- rate against common competitors. sons from Netscape and its Battle with Microsoft. It is scheduled to ings among Oracle Corp., Nets- a book, Competing on Internet ‘Time: Lesappear in stores days after the start of Microsoft's Oct. 15 trial. Microsoft, accused of trying to tech companies routinely collabowanted about high-level strategy meet- cape, Apple ComputerInc., ae Corp., Novell Inc., Sun Micros: tems ‘Inc., Hewlett-Packard Co. and Compaq Computer Corp. and the Institute of Technology (MIT), demanding Ln WORKSHOP that they turn over taped inter- views with executives from rival Netscape Communications Corp. David Yoffie of Harvard and ART & RI \ HOME B Did you know that 89% of incomes over $50,000 a year How Would You Like to SAVE of smalbs businesses? Howev r, 4 outof §Potaenc businesses don't last § =~eamed eon il a nm Both Your Internet AND Your) wossouoarteno? 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