Effects of Fed Interest Rate Hikes Vary
Refinancing Transactions Drop, Nonconforming Loans to Take Hit
The Federal Reserve’s increase last week of benchmark interest rates as a measure to contain rising inflation will have differing effects on borrowing and investing, experts say.
Luis Raúl Padilla, executive vice president of Sun West Mortgage in Puerto Rico, told Caribbean Business that the 0.75 basis point interest rate hike, the steepest since 1994, will lead to costlier short-term financing, such as that for credit cards, personal loans and auto loans. While the impact will not be immediate for longer term mortgage loans, people taking out nonconforming loans will be the first to see rising financing costs.
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