WASHINGTON, D.C. (WLNS) – The latest rate move from the Federal Reserve pushes the benchmark short-term lending rate to a range of 3 to 3.25%. A big jump from February when the rate was just 0.25%.
And the central bank is not stopping anytime soon.
The rate hikes have clear winners and losers. Savers are the big winners, as they finally can earn more interest on checking, savings, CDs, money market accounts, and government bonds.
Conversely, borrowers are the losers of the Fed’s action:
The average credit card interest rate is more than 18% up from 16.3% in January.
The average 48-month loan rate for a used car was around four and a half percent (4.44%) at the beginning of the year, now it’s more than 5.5% percent (5.56%).
Even though the Fed does not directly control longer-term mortgage rates, those rates have jumped to over 6%, double what they were a year ago (2.86%).
To put that into perspective, last year a 30-year fixed rate loan for $300,000 would have a monthly payment of $1,242 in principal and interest. With the current rate that monthly payment jumps to more than $1,800.
The Fed is expected to continue pushing up rates which will continue to make borrowing money more expensive.