👿💰🌎 JUST IN: Federal Reserve Raises Interest Rates by 75 Basis Points – AGAIN 👿💰🌎
(www.thegatewaypundit.com)
🤡 Clown Fed World 🌎
You're viewing a single comment thread. View all comments, or full comment thread.
Comments (58)
sorted by:
I’m gonna have to look up “basis points” …
Cause I’m a dork? Financial dork that is …
Ok, but I want a full report when you're done. 😁
✌️😂🤪 - this could break my brain housing unit, but I will!
Look forward to it!
u/#trumpflag
“The word basis in the term basis point comes from the base move between two percentages, or the spread between two interest rates.” https://www.investopedia.com/terms/b/basispoint.asp
So if base points are lowering (interest rates are lowering?) isn’t that at a good thing?
The Fed is raising their rate 0.75% or 75 basis points. They are doing this to try to curb inflation. The problem is, with interest rates rising, it will have a domino effect on other lending rates. We've already seen mortgage rates rise significantly this year and with this news they will only go higher. The fed rate doesn't directly affect mortgage rates, but it is a sign the money will cost more to borrow.
As mortgage rates go up more and more people will default on their home loans, especially if their rate is floating (meaning it fluctuates) or if they have an Adjustable Rate Mortgage (ARM) loan. With an ARM, the interest Rate is locked for a period of time and then adjusts to the Market. So one might have an ARM at 3 percent now, but when the initial term ends, say after 3 or 5 years after it was originated, that rate could go up to 5% or more. That's a 66% jump in the interest rate.
The higher the interest rates the less home people can afford. This will make it harder for people to buy homes and it will also force home values down. If people recently bought a home and now it is worth $100,000 or $200,000 less, they could be in financial peril, especially if they put little money down. Home equity loans will be under water, meaning the equity the loan is based on will disappear due to the lower valuation. The money people think they have in their homes will disappear.
The "reason" the Fed raises interest rates is to try to cool a market down so it doesn't crash so hard. The problem right now is we are already in a recession. Raising rates now will only fuel the crash and make it hit harder.
It would be in everyone's best interest to plan accordingly. Save cash. Sell your expensive toys. Be prepared.
This is just my opinion. I am not a financial advisor or a lender. You should speak with an expert you know and trust. Find someone who lived through the last market crash as they will have personal experience with what happened before. Avoid new lenders or financial planners that have never seen a market crash before.
Thank you for the lesson - I really am a dork when it comes to money. My husband manages money very well for us and his business. But I contribute to our lives in my own good ways (gardening and preserving, providing health insurance through my job). It’s great to be a team :-)