Here's What the Federal Reserve's Fourth 0.75 Percentage Point Interest Rate Hike Means for You
What the federal funds rate means to you
to take out a loan, causing people to borrow and spend less, effectively pumping the brakes on the economy and slowing down the pace of price increases. Already,"mortgage rates have rocketed to 16-year highs, home equity lines of credit are the highest in 14 years, and car loan rates are at 11-year highs," he said.Even though 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the economy, anyone shopping for a home has lost considerable purchasing power, in part because of inflation and the Fed's policy moves.
On a $300,000 loan, a 30-year, fixed-rate mortgage at December's rate of 3.11% would have meant a monthly payment of about $1,283. Today's rate of 7.08% brings the monthly payment to $2,012. That's an extra $729 a month or $8,748 more a year, and $262,440 more over the lifetime of the loan, according to LendingTree.
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