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u.s. news Diahuebs 17 Maart 2022

How higher interest rates will affect Americans’ finances

(AP) — Americans who the Fed will succeed in cool- mortgage rates.
have long enjoyed the ing demand for homes, cars
benefits of historically low and other goods and services, For now, though, faster in-
interest rates will have to thereby slowing inflation. flation and strong U.S. eco-
adapt to a very differ- nomic growth are sending
ent environment as the Yet the risks are high. With the 10-year Treasury rate up.
Federal Reserve embarks inflation likely to stay elevat- The average rate on a 30-
on what’s likely to be a ed, in part because of Russia’s year mortgage, in turn, has
prolonged period of rate invasion of Ukraine, the Fed jumped almost a full percent-
hikes to fight inflation. may have to drive borrowing age point since late Decem-
costs even higher than it now ber to 3.85%, according to
Record-low mortgage rates expects. Doing so potentially mortgage buyer Freddie Mac.
below 3%, reached last year, could tip the U.S. economy If you’re looking to buy a
are already gone. Credit card into recession. home and are frustrated by
interest rates and the costs of the lack of available houses,
an auto loan will also likely “The impact of a single which has led to bidding
move up. Savers may receive quarter-point interest rate wars and eye-watering prices, roughly the same amount as en their profits. They do so
somewhat better returns, de- hike is inconsequential on that’s unlikely to change any- the Fed hike, usually within by imposing higher rates on
pending on their bank, while the household budget,” said time soon. one or two billing cycles. borrowers, without necessar-
returns on long-term bond Greg McBride, chief finan- That’s because those rates are ily offering any juicer rates to
funds will likely suffer. cial analyst for Bankrate.com. Economists say that higher based in part on banks’ prime savers.
“But there is a cumulative ef- mortgage rates will discour- rate, which moves in tandem
The Fed’s initial quarter- fect that can be quite signifi- age some would-be purchas- with the Fed. This is particularly true for
point rate hike Wednesday cant, both on the household ers. And average home pric- large banks now. They’ve
in its benchmark short-term budget as well as the broader es, which have been soaring Those who don’t qualify for been flooded with savings as
rate won’t have much imme- economy.” at about a 20% annual rate, low-rate credit cards might a result of government finan-
diate impact on most Ameri- could at least rise at a slower be stuck paying higher inter- cial aid and reduced spending
cans’ finances. But with in- Mortgage rates don’t neces- pace. est on their balances, and the by many wealthier Americans
flation raging at four-decade sarily rise in tandem with the rates on their cards would during the pandemic. They
highs, economists and inves- Fed’s rate increases. Some- But Odeta Kushi, deputy rise as the prime rate does. won’t need to raise savings
tors expect the central bank times, they even move in the chief economist at First rates to attract more deposits
to enact the fastest pace of opposite direction. Long- American Financial Corpora- Should the Fed decide to or CD buyers.
rate hikes since 2005. That term mortgages tend to track tion, notes that there is such raise rates 10 times or more
would mean higher borrow- the rate on the 10-year Trea- strong demand for homes, as over the next two years — a But online banks and oth-
ing rates well into the future. sury note, which, in turn, is the large millennial genera- realistic possibility — that ers with high-yield savings
influenced by a variety of fac- tion enters its prime home- would significantly boost in- accounts will likely be an
On Wednesday, the Fed’s tors. These include investors’ buying years, that the hous- terest payments. exception. These accounts
policymakers collectively expectations for future infla- ing market won’t cool by are known for aggressively
signaled that they expect to tion and global demand for much. Supply hasn’t kept up. The Fed’s rate hikes won’t competing for depositors.
boost their key rate up to sev- U.S. Treasurys. Many builders are struggling necessarily raise auto loan The only catch is that they
en times this year, raising its with shortages of parts and rates as much. Car loans tend typically require significant
benchmark rate to between Global turmoil, like Russia’s labor. to be more sensitive to com- deposits.
1.75% and 2% by year’s end. invasion, often spurs a “flight petition, which can slow the
The officials expect four ad- to safety” response among “We’ll still have a pretty ro- rate of increases. If you’re invested in mutual
ditional hikes in 2023, which investors around the world: bust housing market his funds or exchange-traded
would leave their benchmark Many rush to buy Treasurys, year,” Kushi said. Savings, certificates of deposit funds that hold long-term
rate near 3%. which are regarded as the and money market accounts bonds, they will become a
world’s safest asset. Higher For users of credit cards, don’t typically track the Fed’s riskier investment. Typically,
Chair Jerome Powell hopes demand for the 10-year Trea- home equity lines of credit changes. Instead, banks tend existing long-term bonds
that by making borrowing sury would lower its yield, and other variable-interest to capitalize on a higher-rate lose value as newer bonds are
gradually more expensive, which would then reduce debt, rates would rise by environment to try to thick- issued at higher yields.

Missouri could make it harder to get out-of-state abortions

(AP) — First-of-its-kind A proposal that could be de- dents, who could file lawsuits the landmark ruling could be Under Coleman’s mea-
Missouri legislation shows bated in the Legislature as against those they believe tossed out. sure, anything from driving
that anti-abortion law- soon as next week seeks to have violated it. women across state lines for
makers in Republican-led make it illegal to “aid or abet” “If the court does that, the abortions to internet provid-
states aren’t likely to stop abortions outlawed in Mis- State Rep. Mary Elizabeth ability to get an abortion will ers allowing access to certain
at banning most abortions souri, even if they are per- Coleman’s bill is aimed at a be on the line for everyone abortion-related websites
within their borders but formed in other states. key frustration for abortion in America, and so we’re at would be outlawed. She said
also could try to make it foes: people crossing state a crisis point,” said Andrew St. Louis-area billboards ad-
harder to go out of state to Like a Texas law passed last lines to avoid restrictions. Beck, senior staff attorney vertising easier-to-get abor-
end pregnancies. year, the bill puts enforce- The bill also targets a network with the ACLU Reproduc- tions in neighboring Illinois
ment in the hands of resi- of 90-plus groups across the tive Freedom Project. “The would be banned, too.
U.S. that have sprung up spe- Missouri bill crystallizes that
cifically to preserve access to as extreme and dangerous as “It’s trying to evade the laws
abortion. that crisis is, it’s just the first of the state of Missouri,” said
step in politicians’ effort to Coleman, a St. Louis-area
The proposal comes as the outlaw abortions for every- Republican. “Abortion is a
U.S. Supreme Court is ex- one.” really brutal practice and Il-
pected to decide by June linois has chosen not to, in
whether to overturn its 1973 Missouri lawmakers in 2019 any way, provide protections
Roe v. Wade decision legal- passed a law banning almost for the unborn and women,
izing abortion and GOP-led all abortions if Roe v. Wade is and so we’re trying to do ev-
states rush to pass more re- overturned. erything we can to make sure
strictions in anticipation that Missourians are protected.”