RALEIGH, NC (WNCN) — The Federal Reserve has hiked interest rates up once again all in an effort to fight inflation.
And it’s likely to have big impacts for those looking to borrow money.
“It’s obviously going to affect very substantially people who are borrowing money from credit cards to home loans to auto loans. Same thing for businesses,” said Mike Walden, an economist at NC State University.
The hike will likely have an impact on mortgage rates too.
Economists say fixed-rate home loans such as 15- or 30-year mortgages are likely to trend higher in the weeks ahead.
It’s not so good news for prospective home buyers who are already seeing interest rates for home loans at six percent—that’s almost double what it was this time last year.
“I think overall the home buying market is going to slow,” said Walden.
Phil Jawny, Senior Loan Officer with TowneBank Mortgage, says if the fed gets a handle on inflation mortgage rates will eventually benefit.
“That’s going to be beneficial for mortgage rates and you’ll see that the affordability in housing will loosen up but a good point to take away is that home values are not going down,” said Jawny.
But there is a positive to come out of the interest rate hike rates on savings accounts likely to rise.
“If you’re in that situation where you don’t have to borrow money, where you’re saving money and you look at the stock market and you say whoa, I don’t want to touch that because it’s been wobbly, it’s all over the place, I want to get some more interest on my CD’s, on my short term bonds, yes, you’re going to get that so that is one positive here,” Walden said. “But I think that’s probably a small percentage of people. Most people are going to be adversely affected by the higher interest rates.”
The latest 0.75 percentage-point hike will add an extra $75 of interest for every $10,000 in debt.