A week after the Federal Reserve boosted a key interest rate for a fourth straight time, Friday’s robust jobs report led Wall Street investors to anticipate another significant rate hike in September.
As if wasn’t already tough enough to make a major purchase at a time when living costs are skyrocketing, the interest rates to finance those pricey purchases are going up.
The Fed last week signaled still more increases for the federal funds rate, which influences the interest rates lenders charge people buying homes, cars or using a credit card. The Fed had already boosted the federal funds rate three times since March. After questions about stock market turbulence, Staton says the biggest question clients have is whether to move forward or wait on rate-sensitive transactions such as house purchases.
A major spending decision is a big choice in any context — let alone at a point when inflation is at a 41-year high and talk continues of a potential recession. Here’s what to consider if you are pausing a search for a new car or home, or speeding up the search to get ahead of even higher rates. More than two in 10 of people said they expect to take on credit card debt in the coming six months, according to a recent LendingTree survey. One third of those people have good FICO FICO, +1.49% credit scores ranging from 670 to 739.
Find a way back. Staton leans toward pressing ahead with bigger purchases like a house now, as long as the buyer is financially ready to do so. Car prices reflect the same dynamic. In June, the typical monthly payment for a new car hit a record-high $730, according to a Cox Automotive/Moody’s analysis this month that factors interest rates, prices and incentives.
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