Mortgage rates have already run up sharply since the election — rates on a 30-year fixed mortgage now stand at about 4.25 percent, up from 4 percent late last year
and 3.75 percent in early November, according to Inside Mortgage Finance.
The typical credit card holder who is carrying a balance will quickly see annual interest charges rise to 16.75 percent from 16.5 percent.
“This is a rising tide that lifts all boats, and you’re going to feel it in equal magnitude wherever you sit on the credit spectrum.”
Still, rather than focusing on the imminent move by the Fed, experts are warning
that the long-term trajectory for borrowing costs will steadily move higher, especially if the central bank follows through on signals that it will raise rates twice more this year.
Short-term rates have crept higher since the Federal Reserve embarked on its path to normalize monetary policy in December 2015,
but savers wouldn’t know that: The typical savings account currently pays 0.1 percent per year.
And because the outstanding balances of mortgages are so much larger than they are for credit cards
or home-equity loans, the ultimate impact of higher mortgage rates is much more noticeable.
But because credit card debt is so much more expensive than other forms of credit, like a mortgage
or a car loan, an already expensive way to borrow will become even more burdensome.
“I don’t think there’s any question that mortgage rates are heading to 5 percent or higher,” Mr. Cecala said.
“We’ve been spoiled,” said Mr. Cecala, noting that during the housing boom before the recession, 30-year mortgage rates stood at 6 percent.