INDONESIAKININEWS.COM - With inflation hitting record levels, the U.S. Federal Reserve is poised to hike interest rates for a fourth time s...
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Wednesday, economists expect the Central Bank to impose a second consecutive increase of three-quarters of a percent.
“We're hearing lots of stories about how rising prices, whether it be for gas or for groceries, is really impacting folks’ wallets. So oftentimes they have to make decisions to pay this month's mortgage bill or this month’s credit card bill,” said Michael Goldberg, an associate professor of design and innovation at Case Western Reserve University’s School of Management.
Tuesday, a line stretched outside of Bigman’s Family Center on Kinsman Rd. for a twice weekly food distribution. Clevelanders picking up groceries told News 5 they’re feeling the pinch of inflation.
“With being alone, by myself, it’s kind of hard,” said Odessa Rivers, a retiree who lost her husband earlier this year. “I’m getting help from my kids as much as I could. But I don’t want to press on them too much because they have their own life and their own finances and stuff to take care of.”
According to federal data released earlier this month, the price of goods increased by 1.3% in June, bringing the 12-month total increase above 9%. To rein in the soaring inflation, the Fed will likely raise interest rates on Wednesday.
Before Americans see prices come down, economists say many will feel the effects on their borrowing rates, particularly on mortgages and credit cards.
“There’s some negative impacts we’ll see, particularly for folks that are taking out loans, with the interest rate rise,” Goldberg said.
After several interest rate hikes in recent months, Northeast Ohio realtors are beginning to see signs a red-hot housing market is cooling.
“I'm now seeing houses staying on the market for about three to five days,” said Tiffany L. Hollinger, explaining houses were selling within hours just a few months ago. “It's just showing us that unfortunately, these increases in interest rates are taking a toll on buyers.”
The financial advisor and Berkshire Hathaway realtor explained she’s seeing rising interest rates affect the types of homes some buyers can afford.
“I had a buyer this time last year who was pre-approved for up to 250 [thousand dollars]. You’re typically pre-approved for the amount that you can afford for your monthly payment,” Hollinger said. “Her purchasing power has now decreased from 250 to around 150. That's a completely different buying subset of houses compared to a year ago.”
Despite decreasing buying power, Hollinger recommends not waiting to purchase a home if you’re in the market.
“People think, ‘Oh, I'm going to wait until housing prices drop,’” she said. “If the feds are increasing interest rates, that means the cost and your purchasing power is going to diminish. So my advice to buyers now is to buy now. You can always refinance in the future when interest rates go down. But you don't want to have to pay more for a house by waiting.”
She also said the best way to prepare for the coming economic uncertainty is to focus on savings.
“You need to have cash for day-to-day households, pay down your credit cards, build up your cash reserve,” Hollinger said. “If there's nothing more that I can emphasize than anything else it's save, save, save.”
The Fed is expected to announce its latest interest rate hike Wednesday following a two-day meeting.
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Source: news5cleveland
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