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HomeReal EstateFederal Reserve may not hike interest rates. What that means for you

Federal Reserve may not hike interest rates. What that means for you


Credit card rates top 20%

Mortgage rates are at 8%

There are still many reasons for mortgage rates to climb upward, says Moody's

“Rates have risen two full percentage points in 2023 alone,” said Sam Khater, Freddie Mac’s chief economist. “Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.”

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rose, the prime rate did, as well, and these rates followed suit.

Now, the average rate for a HELOC is near 9%, the highest in over 20 years, according to Bankrate.

Auto loan rates top 7%

Federal student loans are now at 5.5%

Private student loans tend to have a variable rate tied to prime, Treasury bill or another rate index — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Deposit rates at some banks are up to 5%

“Borrowers are being squeezed but the flipside is that savers are benefiting,” said Greg McBride, chief financial analyst at Bankrate.com.

While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.46%, on average, according to the Federal Deposit Insurance Corp., or FDIC.

However, top-yielding online savings account rates are now paying over 5%, according to Bankrate — which is the most savers have been able to earn in nearly two decades.

“Moving your money to a high-yield savings account is the easiest money you are ever going to make,” McBride said.

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