An interest rate hike makes borrowing more expensive. So any purchase that requires a loan — for a home, car, or higher education — could be affected. Credit card holders should expect higher payments in the coming months. Learn more:
That rate could reach as high as 7% or 8%, Derek Horstmeyer, a finance professor at George Mason University’s School of Business, told ABC News. Each single percentage point increase in a mortgage rate can add thousands or tens of thousands in additional cost each year, depending on the price of the house,“Any sort of asset that you need to borrow money to acquire,” Horstmeyer said. “Will be much more expensive.
Since many investors already expected rate hikes like the 0.75% increase on Wednesday, the strategy at the Fed may have little effect on the market. But a further market downturn would move stock portfolios, 401s, and likely cryptocurrency holdings even lower, and could delay an eventual market recovery.in early trading on Thursday, and the tech-heavy Nasdaq Composite is down more than 30% since its last all-time high.
MORE: 'Bear market' and 'recession' are back in the conversation. What they mean and why they matter. “At this point, a hard landing is unavoidable,” Eric Sims, a professor of economics at the University of Notre Dame, told ABC News. “There will be some short-term pain.”
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