Fed Rate Hike Brings Higher Borrowing Costs Amid Rising Mortgage Rates
The US economy is facing affordability concerns as the Federal Reserve hikes its key rate for the first time in three years, bringing the benchmark interest rate to about 3.9%. This move could result in higher borrowing costs for mortgages, auto loans, and credit cards. The Fed also signaled another potential rate hike to 4.1% later this year.
The US mortgage rate has reached nearly 7%, its highest level in over 19 months, with a 30-year fixed-rate home loan averaging 6.95%. This is the fourth week of rising mortgage rates, which could impact homebuyers and refinancers.
Despite the Fed's rate hike, retail sales climbed 1.2% in August, exceeding expectations. However, excluding business at gas stations, retail sales rose only 1.1%, indicating that inflation may still be a concern for consumers.