For the sixth, count them, sixth time just this year, the Federal Reserve has raised interest rates, and you can pin it squarely on inflation.
Up they went on Wednesday by another 0.75 percentage point, making the challenges of getting loans, buying homes and cars, and growing businesses even harder under Joe Biden’s administration.
Inflation rates are still at a 40-year high, so raising the interest rates a half dozen times has not helped stem that.
The average interest rate on a 30-yer fixed-rate mortgage is up to 7% for people looking to buy a home and needing a mortgage. That’s nearly double where it was in March when you could get the loan for 4% interest.
A CNBC story cited an example from McBride of what that means dollar-wise. That increase in mortgage rates is equivalent to a 35% increase in home prices, so someone approved for a $300K mortgage a few months ago would qualify for less than $200,000 now.
Carrying a balance on a credit card will cause more pain when you get your statement because of this rate hike too.
In the car market, the costs of automobiles are rising right along with the interest rates. Average car loans are clocking in at 5.63% now compared to 3.86% earlier this year.
It would be nice if we could say this is the last rate hike you will see, but part of the statement from the Fed Wednesday shows that is not the case.
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
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