The Wall Street Journal today has a front page article Fed Hikes Don’t Go Far Enough For Some Investors. In the article there is a quote from an analyst “When you’re looking at where deals are pricing, it is simply not that onerous to borrowers”. This analyst wants the Fed to raise rates more.
That depends on which side of the fence you are standing on. If you are trying to purchase a home and the interest rates have more than doubled the past two years; that is onerous. If you have credit card debt and live off the credit cards and the Prime rate has gone from 3.25% in March 22 to 8.25% May 23; that is onerous. If the cost of gasoline has doubled that is onerous for most people.
In 1981 I was managing a Thrift and Loan and we offered a 90 Day Certificate of Deposit at 15%. In March 1980, six-month CD rates averaged 17.74% APY, and the rate rose to 17.98% in August 1981. At the same time, the average 3-month CD rate hit 18.65%. Those who had money earned a lot more money and wanted the interest rates to remain high.
My Mortgage Loan was at 9% and the bank sent me a letter saying if I would make 4 payments in a month they would post the payment with no interest. They made an offer for 2 and 3 payments as well. The banks needed the cash but I did not have money to take advantage of the offer.
Just as all Real Estate is Localized—- Personal Finance is personal and local. For most of the population I feel that raising rates is harmful.
