ARIZONA, USA — For a record third time in three months, and for the fifth time in 2022, the Federal Reserve on Wednesday announced another hike on interest rates of three-quarters of a point, pushing the federal interest rate in range of 3-3.25 percent.
The move is an attempt to try and cool down a scorching hot economy in the midst of a 40-year high in inflation.
The move means it will cost every American even more money to take out loans.
"It's a hard time right now," said Matt Vian with Northsight Wealth Management.
He’s encouraging people plagued with credit card debt to find a way to lose it, or prepare to pay hundreds, or even thousands of extra dollars in interest.
"People with floating loans on credit card debt or loans not locked in at an interest rate are going to be hurt. Every paycheck you get is going to go into paying off that credit card," Vian said.
People living paycheck to paycheck will reportedly feel the biggest impact.
Vian said making minimum payments also just won’t do. He also cautioned people to take a good look at their finances, especially when it comes to subscription services.
“Sometimes you’re paying $100 for a feature," he said. "Instead of looking at it as $10 a month here and there, how much am I paying in a year? Where can I use the money?"
The latest interest rate hike is also likely to drive down the housing market.
“Housing prices have been dropping by 50 percent in listings since July,” Phoenix realtor Kevin Merriweather said.
After an unprecedented two years, he said buyers are now firmly back in control of the real estate market.
Many homeowners are reluctant to give up 2 percent mortgage rates on their homes, to pay more money for less home, as interest rates surge.
The Phoenix market has many homes for sale that have been sitting on the market for weeks, sometimes months, which Merriweather said is a complete reversal from what we saw in 2021.
“The days of homeowners getting multiple offers on a home, and listing demands on what they want are over for now," he said.
First-time homebuyers will reportedly have to hundreds of dollars more in mortgage compared to a few years ago. He said with banks still lending, homeowners should not wait until interest rates come back down, mainly because it’s unknown when they will drop.
"Don't try to wait it out. Get in the game, and if you stay in the house long enough it will eventually get you your money back,’ Merriweather said. "Our country has been resilient and we've been through multiple ups and downs times and times before and every single time it's gut-wrenching and it's horrible and every time we've pulled through."
Economists say at least two more interest rate hikes are expected this year, and could grow to 4 percent by March 2023.
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