Fed rate hikes are coming — how to tackle your savings, mortgage, car payments and credit-card debt in advance

Wall Street investors and Washington D.C. lawmakers are closely listening to what Federal Reserve Chairman Jerome Powell says Wednesday about the central bank’s next steps in its fight against decades-high inflation.

When Federal Open Market Committee increases rates, borrowing costs increase throughout the economy — and come back to haunt consumers who need to factor those higher borrowing costs in their financial decisions. As Powell charts a course for rate hikes during this recovering economy, here’s how people can plan their own next financial steps for the coming months:

Plus, the Federal Reserve has reduced the amount of mortgage-backed securities it is purchasing, while has reduced liquidity in the mortgage market. That, too, may be having an effect on interest rates. At the same time, higher rates could make it harder for some buyers to qualify, since it’s a more onerous financial commitment.

The spring home-buying season is just around the corner, and that will be a time when more properties will come to market. Nevertheless, today’s buyers should be prepared for a tough market. The inventory of homes for sale hovers around record lows, meaning the properties that are on the market will likely fetch multiple offers and attract bidding wars.

When the Fed’s rate goes up, APRs closely follow and the cost of carrying a balance goes up, Matt Schulz, LendingTree’s chief credit analyst, previously said. After a rate increase, it can take up to two months for APRs to increase, he said. The average APR is now 19.55%, unchanged from December, according to LendingTree.

However, McClary noted roughly 30% are spending more than a year ago and approximately one-fifth say they are saving less. “A lot of people are living close to the edge” and even a small APR increase may have an outsized impact, he said. Should I get a car loan before the rate hike? To begin with, cars aren’t much of a bargain these days — thanks to the ongoing chip shortage which is limiting supply of both new and used cars.

— Greg McBride, chief financial analyst at Bankrate.com “A rise in interest rates has a minimal impact on auto loan rate affordability,” he told MarketWatch. “The difference of one-quarter percentage point amounts to a difference of $3 per month for a car buyer borrowing $25,000.”

Loans Loans Latest News, Loans Loans Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

As Fed Meets, Investor Angst Over Rate Hikes Spooks MarketsWild volatility in the stock market this week has put heightened scrutiny on the Federal Reserve’s meeting Wednesday and whether the Fed will clarify just how fast it plans to tighten credit and potentially slow the economy
Source: NBCLA - 🏆 319. / 59 Read more »

How Fed hikes could affect mortgages, car loans, card ratesWASHINGTON (AP) — Will mortgage rates go up? How about car loans? Credit cards? How about those nearly invisible rates on bank CDs — any chance of getting a few dollars more? With the Federal Reserve signaling Wednesday that it will begin raising its benchmark interest rate as soon as March — and probably a few additional times this year — consumers and businesses will eventually feel it. What shift? We've known for months this was likely happening in March. Stop pushing this narrative.
Source: AP - 🏆 728. / 51 Read more »

Stocks fall, yields rise after Fed signals rate hike ‘soon’An early market rally gave way to a broad slide for stocks and a surge in bond yields Wednesday after the Federal Reserve signaled it plans to begin raising interest rates “soon.”
Source: chicagotribune - 🏆 8. / 91 Read more »

Fed Interest-Rate Decision Tees Up March IncreaseThe U.S. central bank held short-term interest rates steady and signaled intentions to raise them in mid-March, the latest turn toward removing stimulus to temper elevated inflation. On one hand he should have never spoke as the Fed report said all that was needed. The amazing thing is I sat thru his talk & read the report beforehand didn’t hear any difference. On the other hand what I believe happened was Algos initiated selling at the apex driving stocks⬇️ A 0.25% rise in interest rates... to combat 7+% inflation. Yeah, got it.
Source: WSJ - 🏆 98. / 63 Read more »