Another Interest Rate hike. Just heard on the news. Yes, I'm angry.

[Paper Roses]

With the good work that Biden is doing, I can't understand why this is necessary. It punishes those of us who have any debt. Whether it is mortgage, Credit card...whatever. It is killing me. My late husband and I fell for the "good things" about a Reverse Mortgage. We took one out to do some repair needed for our 200 year old house. Update the kitchen and bath. Sell the house and move to something smaller since our kids were now off on their own. Shortly after applying and signing for this awful thing, my husband died(15 years ago). I have had to borrow a couple of times but the interest is killing me and certainly the same thing is happening to others.

Can someone please tell me why this is rise in rates is a good thing. Who suffers? Certainly not the wealthy. What's a few more dollars for them. For those like me and others with any kind of debt, it is a disaster.
(Thanks for letting me vent).

[Chi67]

1. Agreed

Thus shit needs to stop. I would love to buy a condo in the next year, but I can't til interest rates come down.

[SharonClark]

2. I'm no economist and couldn't start to explain

economic policy, but it helps people who save money.

[JohnSJ]

3. They are trying to slow down the economy to curb inflation, and it is actually

working somewhat

I suspect we are very close to the end of rate hikes.

Compared to what Paul Volker did, this rate increase is very moderate

Problem was that interest rates were kept too low for too long after the economic implosion caused by deregulation

[rownesheck]

4. Raising interest rates

to slow down the economy. Sounds like an f'd up system, right? Anything that helps the regular folks is seen as bad in a capitalist economy because corporations have to compete for workers which means they have to increase worker pay which means cutting into corporate profits. Millionaires and billionaires can't stand to lose even the teensiest amount of money. So, in order to make them happy, the fed has to try and crash the economy.

Who in the hell thought this would be a good system?

[SCantiGOP]

11. Just about every economist

thinks this is not just a good idea, but a necessity.

[NewHendoLib]

5. Killing investment interest rates

[marble falls]

6. To cut money supply and dampen inflation. It's working.

[Silent3]

36. It's correlated - inflation has been going down while interest rates have been going up, but...

...as is often said, correlation is not necessarily causation.

It's hard to know if other factors haven't been more important, like broken supply chain problems clearing up, or like the spate of price gouging we all know has been a big problem perhaps having run most of its course.

[marble falls]

38. The trick is to keep it from going into recession. The Fed meets often and discusses it thoroughly..

... SoT Janet Yellen's and Fed Reserve head Jerome Powell seems to have done a good job.

[Mosby]

7. I thought reverse mortgages pay you.

And it sounds like you took out some HELOCs. You should talk to a financial advisor or your banker.

[AZ8theist]

9. Yeah, my first thoughts....

Why would interest rates affect a reverse mortgage? You don't pay it off until the property is sold.

Or at least that's the sales pitch.

[JanMichael]

12. I don't believe a word that the reverse mortgage sellers utter.

Who knows what they can do once you sign.

They should be illegal.

[AZ8theist]

15. Agreed

It's like the multitude of commercials selling Medicare Advantage.

They NEVER tell you about the medical denial nightmares.

[moonscape]

29. They can be great when used wisely. A

close friend’s financial planner advised her to use an equity-line reverse mortgage as a financial tool and it has worked brilliantly for her. She got it when 1st eligible, used it for extra expenses not to live on, sold her house and moved to Oregon, got another one with her purchase, then refinanced it when interest rates were low which opened up more credit line, and at 80 years old has been thrilled with how good it has been for her.

[airplaneman]

31. I think reverse mortgages are the best way to give your inheritance to the bank.

A few things I am aware of.
-10% are in default (a pretty high number for a variety of reasons)
-You pay upfront about $25K for insurance that protects the bank
-You cannot re-negotiate the interest rate
-They make you buy expensive home insurance (its not your choice what policy you buy)
-It's probably the most expensive way to borrow money.
There are other ways to borrow where you don't screw yourself so badly.
-Airplane

[moonscape]

28. The interest rate increase eats up

equity faster.

[stopdiggin]

8. short answer is that inflation is still too high

(although improving more than many had hoped, or thought possible) Or at least too high in the eyes of the fed. Whether or not they are correct in that - a really good argument can be made that a high inflation economy is every bit as damaging to an economy (including to the 'little guy' ) as a period of high interest 'corrections.'

whether you're persuaded by that explanation or not ... kinda' depends on your personal situation and, to some degree, the 'camp' you fall into. (meaning - not everyone's opinion is based on their personal bread and butter)

[SCantiGOP]

10. Without the rate hikes

We might have 20% or higher inflation now, and a major recession as a result.
Turkey currently has interest rates of 15%, and because they took so long to act the inflation rate is around 80%.
Raising interest rates is not some nefarious plot against Biden.

[Frasier Balzov]

13. Interest on the National Debt is spiking too.

That's a budget buster on a macro scale.

Accelerated borrowing to service the debt on previous borrowing.

Taxes will need to be raised.

[JCMach1]

14. Fed SPECIFICALLY wants unemployment to rise... It's sick

[newdayneeded]

25. Powell does, who by the

way, was appointed by trump. But I'm sure a trump appointed person would never do something to hinder the Biden administration. Right?....Right?

[honest.abe]

16. I dont think interest rate hikes is the solution to inflation.

The problem is people are still spending like crazy and businesses are raising prices like crazy because they can get away with it. We go to Costco frequently and its always wall to wall people with huge loads of items in their oversized cart. How is raising interest rates going to stop that??

[inthewind21]

18. Interesting

Your basing "people spending like crazy" based on what you assume of others during your own "frequent" trips to Costco? Did you also see a lady there with 6 kids and a Gucci purse roll out of her Esclade and pay with food stamps?

[Progressive dog]

17. Inflation is too hgh

Raising interest rates is the main weapon the FED has against inflation. The rising interest rates don't affect existing fixed rate loans.

[DemocraticPatriot]

33. Inflation was a lot higher in 1979-1983....

I have always thought that those complaining about the post-pandemic inflation
are a bunch of "snowflakes" who don't have any idea
what "high inflation" IS.... (or they are the news media, trying to bring down Biden)


Further, that 80 inflation was combined with high unemployment and high interest rates,
so those "disapproving" of the Biden economy
don't have a goddam clue how good they have it!

(Maybe they should ask their parents, or their grandparents....)

[Progressive dog]

39. Sometime during that period

I earned 12% interest on a 2 year CD. In 77 I got a twenty year fixed rate mortgage at 8.5%, we sure did have high inflation then.

[Zeitghost]

20. It doesn't hurt people with debt

At least not for the most part because most debt has fixed terms. It discourages new debt and encourages saving.

[Takket]

21. where are you hearing this? I just checked multiple news sites and google and nothing about a rate

hike.........

[GoodRaisin]

37. If you listen to or read financial/economic news the Federal Reserve is all

but promising another rate increase and probably two more this year, one in July and another in the 4th quarter. I watch Bloomberg and they talk about potential rate hikes as much as MSNBC talks about Trump.

[Silent Type]

22. Very sorry. I think problem is that inflation hits food, affordable houses, health

care, home maintenance, common consumer products, etc. That is, Stuff that impacts hundreds of millions of us here and billions worldwide.

If inflation affected only the wealthy, I doubt we’d care or do anything.

[Xolodno]

23. What a lot of others have said, it slows down the economy and reverses inflation.

It slows down the Money Supply.

Here is the danger if inflation goes unchecked, soon as you get paid, you run to the store and buy a durable good (i.e. washer, appliance, car, etc.) or drop it into assets that do well during inflation (gold, silver, etc.). Because in a month, you can sell those items for more cash and get what you need. Never mind what this does to supply chains.

And some assets are just held (such as homes) and reduces supply and increases the price. One of the reasons we have not seen the housing market correct itself a bit. So high prices...high interest. Not the time to buy.

And truth be told, they are really taking the conservative approach. Paul Volkner basically yanked the cords to the machines that printed money and dropped us into a nasty recession.

Yes, its painful, but necessary. There aren't too many levers to pull to fix inflation. We can always do what President Ford did and give out buttons that said WIN (Whip Inflation Now)....which did nothing.

The Fed used to run things by having inflation targets and adjust accordingly, so an increase here and decrease there wasn't so painful. But then we got Trump, who put a ton of pressure on the Fed not to raise rates, which started to overheat the economy. Then the pandemic which threw everything into chaos. If we had gotten those increases sooner, it would have been more manageable.

[marybourg]

24. What you heard is that another rate hike is *anticipated* when the Fed

meets on July 25.

And since I am a retiree living on my late spouse’s and my savings, I am one of the ones benefitting, after several years of interest rates so low that my money was essentially earning nothing, and *I* was being “punished”.

It will take another 2 1/2 years, at the current interest rate to make up what I lost to low interest rates. And I may not have 2 1/2 years before I need to start paying for long term care.

But that’s part of living in a capitalist society. I certainly reaped the benefits when, at the start of my earning and saving life, money market interest rates were 16-17%. Of course, mortgage interest was 18% then. So, the economy giveth, and the economy taketh away.

[W_HAMILTON]

26. It's not being done by Biden.

It's being done by a Republican holdover in the independent Fed who is purposefully trying to inflict pain under the guise of controlling inflation, even though inflation has already been coming down and controlled.

Democrats need to learn to clean house of these Republicans once they can. First Comey, now Powell. Get rid of them and feel absolutely no guilt in doing so.

[calikid]

27. THIS

[former9thward]

32. Powell is not a holdover.

He was reappointed by Biden when Powell's first term ended. He became a Biden appointee at that point. Comey was never a holdover either. Obama appointed him to be FBI Director in 2013. Trump fired him in 2017.

[CountAllVotes]

43. +1

TRUTH.

[ProfessorGAC]

30. Don't Think It's Needed

The downward trajectory of the inflation rate is still pretty encouraging.
This shows impatience by Powell even though the rate is lower than anticipated.
I think they could have waited a couple months to see how things shake out. The economy is a supertanker not a Ferrari. Doesn't turn on a dime. (Pun intended)

[DemocraticPatriot]

34. If you took some kind of "variable interest rate" on a reverse mortgage,

well, that would not have been very smart. Maybe you should have done more research....

[roamer65]

35. The Fed increased the money supply by about 50 percent during the pandemic.

They are now increasing interest rates and engaging in quantitative tightening. The goal is to control inflation, but can they do it without popping asset bubbles like housing, stocks, etc?

I doubt it.

[CountAllVotes]

41. My thoughts

I thought that if you took out a reverse mortgage, they send you a check for the value of your home (which these crooks determine!). Now the crooks own YOUR home.

Supposedly all you pay is the regular expenses, like taxes and insurance.

Why are you making payments?

I don't get it!

[Shanti Shanti Shanti]

42. Hasn't happened yet, later this month, July, so say the experts, then, maybe one more this yr