Average mortgage payments will spike by more than $200 and buying a car or carrying a credit card balance will also hit you in the pocket – but savings accounts could offer returns of 2.4%
- The Federal Reserve pushed interest rates up by another 0.75 percentage points on Wednesday, the fourth-consecutive time this year after American’s enjoyed rates at nearly 0 percent throughout the pandemic
- The rate hike is expected to cause interest rates on mortgages, credit cards and all types of loans to go up, causing monthly bill payments to soar and hurting American’s ability to repay their debts
- While interest on savings will also see a small increase as high as 2.4 percent, it would do little to relieve consumers amid the rise in cost of living, which remains high at 8.2 percent
- The Fed is projected to implement another hike in December to reach a benchmark of 4.6 percent
Americans are going to see yet another blow to their wallets after the Federal Reserve raised interest rates by 0.75 percentage points for the fourth-time in a row on Wednesday.
The central bank has acted aggressively in bumping interest rates this year after leaving them at near zero through the pandemic, with the Fed hoping the rate hikes will quell inflation, which remains high at 8.6 percent.
The Fed’s main tool to fight inflation is by setting the short-term borrowing rate for commercial banks, which then pass that rate on to consumers and businesses, thus cooling the economy and easing the cost of living.
While inflation may go down, American’s loan payments are expected to surge, with mortgage rates hitting 7.16 percent last week, well above the rates seen just before the 2008 Great Recession.
Interest rates for auto loans and credit cars are also expected to soar, making it even harder for the average American to claw their way out of debt.
Savers, however, may see some benefits as their returns increase with the raising interest rates, with consumers able to shop for return rates as high as 2.4 percent.
As of Tuesday, only one in five Americans say they would be able to buy a home in the coming years without much difficulty, according to a study by Morning Consult.
A survey of 949 adults who do not own a home also found that nearly two thirds said they couldn’t afford a home they’d want and that house prices — which average in the US at more than $428,000 — are too high.
Likewise, more than half of respondents said buying a home was too risky, and 65 percent said the possibility of losing their job or other main source of income was a major threat associated with homeownership.
‘Americans across generations have an enduring desire to own their own home,’ the the study noted.
Of those surveyed, only 22 percent said they could buy a home without experiencing financial hardship. Another 63 percent said that owning a home would involve hardship or would not be possible.
The remaining 15 percent were not interested in owning.
More at: DailyMail.uk.co