Consumers in U.S. Face the End of an Era of Cheap Credit

Consumers in U.S. Face the End of an Era of Cheap Credit

www.nytimes.com

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent

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“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, a professor of finance and economics at Columbia Business School. “It’s a really big risk.”

Each increase of 1 percentage point in rates adds as much as 19 percent to the total cost of a home, according to Mr. Mayer.

The Mortgage Bankers Association expects the rise to continue, with the 30-year mortgage rate going to 5.5 percent by late summer and as high as 6 percent by the end of the year.

Another area in which higher rates are likely to affect consumers is credit card use. And last week, the Federal Reserve reported that the average interest rate on credit cards reached 14.26 percent in February, the highest since 2001. That is up from 12.03 percent when rates bottomed in the fourth quarter of 2008 — a jump that amounts to about $200 a year in additional interest payments for the typical American household.

Health care costs going up (the government is requiring you to buy health insurance at higher rates now), jobless rate up, employment down, no meaningful job programs, taxes will be going up due to the sunset of the Bush tax cuts by Obama, and now interest rates must go up!

www.nytimes.com
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How much longer can the pressure build before the fateful spark is lit? Things are piling up so fast that it's getting harder and harder to keep track of them all, and what they mean in context to each other. When the MSM is no longer able to camouflage the truth with their idiotic fluff stories, that'll be the sign that the end is here.

This may verywell be a good thing. It may force people to start saving more and being more wise upon their decisions in spending.