Five ways US rate rise will affect you

Posted 4 years ago in News and Politics. 250 Views

Five ways US rate rise will affect you

Five ways US rate rise will affect you

The US central bank has announced its biggest rate hike in nearly 30 years as it ramps up its battle to bring soaring consumer prices under control.

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It lifted the rate the Federal Reserve charges banks to borrow by three quarters of a percentage point.

The consequences will be felt in nearly every corner of the economy - in the US and abroad.

Here are five ways the rate rise in the US will affect you.


More expensive mortgages and other loans
The immediate impact is in the US, where people will face higher borrowing costs for mortgages, credit cards, student loans and other debt.

The average rate on the popular 30-year fixed home loan has already surged to nearly 6% - its highest level since 2008. For the person buying a median-priced home in the US, that means monthly payments have gone up by about $600 since the start of the year.

"I wish I had started looking earlier," says Delores Robinson, a retired educator from Ohio, who bought a new apartment this month.

Ms Robinson says she was relieved to lock in a relatively low rate, though it was higher than it was when she started her search. But for some buyers, the rising rates will push purchases out of reach.

The National Association of Realtors expects home sales in the US to fall 9% this year.


Smaller pensions and more expensive Uber rides
When rates lift off, it tends to prompt a dramatic reshuffling of investments. And with general economic concerns rising, those moves have been especially pronounced.

For those with money in the stock market, like people with 401k retirement accounts, that has meant seeing a sharp slide in the value of their investments.

The SP 500 has sunk more than 20% since the start of January - a milestone known as a bear market - while the Nasdaq has shed nearly a third of its value.

Risky assets, like cryptocurrencies, have seen their prices drop too, which stock exchanges outside the US have also been hit.

Investment firms are also pulling back from riskier ventures, demanding profitability from companies like Uber that have been operating at a loss for years.

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