The Federal Reserve announced Wednesday that interest rates are going up; that means your buying power goes down.
News Center 7′s Dontre Drexelius spoke to Fall Ainina, the Director of Research at James Investment Research Inc, about how much extra this new price hike will cost us.
The interest rates went up by 0.75 percent for everyone, but Ainina says that doesn’t mean everybody will be paying the same price when making big purchases like buying a house or car.
Credit scores will also be playing a role in how this newest increase will affect you. Those with a lower credit score should expect to pay more in interest versus what a person with a higher credit score would pay.
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“Interest was already high, they increased by half a percent, and yesterday they increased by three-quarter percent. The market’s expectation drove the fed, basically to hike the interest rate, the objective is to bring down inflation,” said Ainina.
To put that into perspective, if someone buys a $250K house, on a 30-year mortgage, the new interest rate will cost them $3,600 more a year. That’s $300 more every month.
This upcoming interest rate hike will be the largest increase since 1994.