Fed Hikes Rate, Mortgage Rates Reach Near-Record High

The Federal Reserve hiked its benchmark interest rate for the first time in three years to combat stubbornly high inflation. The quarter-point increase raises the Fed's key rate to approximately 3.9%, potentially leading to higher borrowing costs for mortgages, auto loans, and credit cards.

Homebuyers are facing a difficult situation as mortgage rates have been rising steadily, reaching nearly 7% this week, its highest level in over 19 months. The average rate on a 30-year fixed-rate home loan has climbed to 6.95%, up from 6.26% last year.

Retail sales experienced a modest increase in August, with consumers stepping up their spending by 1.2%. Excluding business at gas stations, retail sales rose 1.1%. The economy continues to face challenges due to inflation and rising costs, affecting households and businesses alike.