As the Federal Reserve continues to raise interest rates and with no reprieve in sight, Americans are beginning to feel the pressure. Consumers looking for home and auto loans are finding that their money gets them a lot less now than it did a few years ago. Simultaneously, consumers with credit card and other debt are also experiencing the impact of these higher rates.
A recent report from the Wall Street Journal showed the significant increase in mortgage rates, which have jumped from about 3% just two years ago to a current rate of around 7%. This increase means that homebuyers could potentially pay hundreds of thousands of dollars more over the life of their loan compared to loans obtained just two years ago.
Because of these higher rates, the National Association of Realtors calculates that the typical American family can no longer afford to buy a median-priced home.
Mark Zandi, the chief economist at Moody’s Analytics, estimates that buying a home or car at this time is “completely unaffordable for the typical American household because you’re mixing the higher borrowing costs with the high prices.” By his estimation, it would require the typical American household 42 weeks of income to purchase a new car, an increase from 33 weeks in 2020.
These raised interest rates are not solely impacting those with home and auto loans. Consumers with credit card debt are finding that their interest rates are up about 6% in just two years, with the average interest rate for credit cards sitting at 20.7%. As Americans carry higher balances and with the collective credit card debt in America passing $1 trillion for the first time, these factors continued to have a significant and negative impact on the financial stability of many individuals and families.
For Americans who do not need to borrow, these higher rates might not significantly affect their daily lives. But for those who are experiencing difficulty meeting debt payment obligations, this can be an overwhelming or stressful time, and filing for bankruptcy may be the right decision. If you have questions about your credit card debt or would like to learn more about how filing for bankruptcy may be beneficial for you, contact Sader Law Firm at (816) 561-1818 for a free phone consultation.