Al Marsad: CNN Senior Business Correspondent Kristen Romans revealed how higher interest rates will affect individual accounts, mortgages, credit cards, auto loans, student loans and business loans.
“Rising rates in America will make it more expensive to borrow money for families and companies, after years of borrowing money at a low rate, debt is now more expensive,” Romans said during a video report on CNN.
She added that higher interest rates would also mean higher rates for mortgages, credit cards, car loans, student loans and business loans, which would cost more.
The dramatic effect was already dramatic in mortgages, where the mortgage jumped from a 30-year fixed rate to above 5% last week from less than 3% last November.
And she added, “The low rates so far are feeding the housing market’s high prices and now the hope that the high interest rate will bring those prices down.”
She continued, “There is another bright spot for savings accounts for years where the economy rewards borrowing money, not saving it… Savings accounts will start earning again but that may take some time.” Noting that “banks are slower to pass interest rate increases to savers than they are to impose higher rates on borrowers.”
She concluded: “The bottom line is that it is a major shift for consumers who will need to repay loans to avoid higher costs to incur them.”