Sunday, April 11, 2010
Interest rate hikes to hit consumers
This article is about how interest rates are going to start rising and the effect it will have on consumer habits. The reason for an increase in interest rates is because of the large amounts of debt the U.S. has accumulated over the years. The first area that will be effected is in real estate, and as a interest rates go up it will reduce the gains in the housing market. Before this point in time rates have been declining for about 30 years. As a side note some other rates that will be affected are credit cards and car loans.
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With the increase in interest rates, people will be able to feel comfortable with investing on a regular basis. This is a proven way to help boost the economy and increase the use of banks and markets for investments.
ReplyDeleteIt was inevitable that interest rates would increase after historic lows following the recession that crippled our economy. With the end of cheap credit, it will be interesting to see how consumers respond. The recovery effort strongly hinges on consumer spending, so I hope that even though interest rates increase consumers will continue to borrow and spend.
ReplyDeleteIt is true that a rising interest rate will impact on consumers’ spending, or the amount of money they would like to borrow. However, if the interest rates is increased in a moderate degree, it will help the consumers to save more, and therefore make the banks have more funds available to invest on beneficial projects. And it helps solve the deficit problem of the government.
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