Economists are warning Americans to get ready because interest rates are likely about to rise. Ballooning national debt and the probability of inflation are going to push interest rates up according to experts. That could mean the end of historic 30-year lows in the cost of borrowing money.
Where can you expect to pay higher interest rates? According to a report in the New York Times, the housing market will feel it first. Interest rates have already increased to their highest levels since last summer. Some experts are predicting rates will hit 6 percent by the end of 2010. “Mortgage rates are unlikely to go lower than they are now, and if they go higher, we’re likely to see a reversal of the gains in the housing market,” said Christopher J. Mayer in a New York Times report. Mayer is a professor of finance and economics at Columbia Business School. “It’s a really big risk.” Mayer says an increase of just one percent in interest rates can add as much as 19 percent to the overall price of a home.
In addition to the housing market, credit card rates could also increase. Recently credit card interest rates reached their highest levels since 2001. Interest rates grew from 12.03 percent at the end of 2008 to 14.26 percent in February of this year which equals about $200 worth of additional payments for the average American home.
Tags: credit card rates, mortgage rates, home loans, interest rates
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