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The Fed Is Hiking Interest Rates Again

The increase will affect loans, savings, and investments The Federal Reserve Bank is raising interest rates, and this could mean significant changes in how you spend your money. The...

The increase will affect loans, savings, and investments

The Federal Reserve Bank is raising interest rates, and this could mean significant changes in how you spend your money. The basic outcome will be positive for those saving money, but will also make borrowing and investing more expensive.

Mortgage and car loan interest rates will be expecting to rise, and this means that more of what you pay to your lender every month will increase due to the rising interest rates. The Fed had lowered interest rates on mortgages for houses to help curb the effects of the housing market crash ten years ago, but now that market is much more secure. Housing prices are now at an all time high, and the rise in interest rates aims to reduce inflation. These higher interest rates will certainly motivated buyers to be extremely considerate when making large purchases.

Your savings account may see minimal increase in accruing money due to the higher interest rates. This means that banks using your money to lend will have to pay you more to use it. However, few will really see a major difference in the amount of money appearing in their account.

Finally, investors will be affected by the rising interest rates. While investors will not react right away due to the fact that these interest rates have already been priced in to the market, and the increase could incentivize a sell of bonds, which would push bond yields higher. Bonds are considered safe investments and affect the prices of long-term loans. Interest rates are still very low, and it takes about a year for any changes in the economy to really be felt.

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