I genuinely don't understand these rate hikes

[Anonymous]

Now if only the chips would show up so the new car market would come back to earth!

[Anonymous]

Anonymous wrote:They don't know what they are doing. Biden is an idiot as well.

This. His job is to read the cards without messing up.

[Anonymous]

Anonymous wrote:To me it seems like this is all going to further widen the gap between the rich and poor. I have a 2% mortgage, several hundred thousand liquid, already 2 paid of cars, kids in public k, i feel like as long as i have a job i will be a massive winner from this and people just starting out trying to get a mortgage, trying to get a car loan, putting a kid in daycare will suffer terribly. Please tell me i am being too pessimistic and Debbie downer and things are not that bad for those that are less financially secure.

Yep, I am worried for my young adult children. One of them just married and it will be nearly impossible for them to buy a house even though they both have well paying jobs. When I bought my first house, we put $5000 down. They’d have to put 10x that or more for a “starter” home.

[Anonymous]

It's great, it's going to bring down housing costs finally.

[Anonymous]

Because there are demand-side problems that are responsible for a lot of this, interest rate hikes aren't going to solve inflation. But people are so freaked out by inflation that I suppose they are hoping it will help some. I'm old enough to remember when people bought homes and got student loans with much higher interest rates than we've been used to. But people have the memories of goldfish, and rich people hate the thought that they might not have as much wealth as they did before, so rate hikes it is.

[Anonymous]

Anonymous wrote:Because there are demand-side problems that are responsible for a lot of this, interest rate hikes aren't going to solve inflation. But people are so freaked out by inflation that I suppose they are hoping it will help some. I'm old enough to remember when people bought homes and got student loans with much higher interest rates than we've been used to. But people have the memories of goldfish, and rich people hate the thought that they might not have as much wealth as they did before, so rate hikes it is.

Ok Bo0mer, those high interest rates were on balances exponentially lower than the prior low interest balances

[Anonymous]

Anonymous wrote:

Anonymous wrote:Because there are demand-side problems that are responsible for a lot of this, interest rate hikes aren't going to solve inflation. But people are so freaked out by inflation that I suppose they are hoping it will help some. I'm old enough to remember when people bought homes and got student loans with much higher interest rates than we've been used to. But people have the memories of goldfish, and rich people hate the thought that they might not have as much wealth as they did before, so rate hikes it is.

Ok Bo0mer, those high interest rates were on balances exponentially lower than the prior low interest balances

Not even close to being a Boomer, but thanks for proving my point about people's lack of memory!

[Anonymous]

Interest hikes decrease demand by making debt more expensive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because there are demand-side problems that are responsible for a lot of this, interest rate hikes aren't going to solve inflation. But people are so freaked out by inflation that I suppose they are hoping it will help some. I'm old enough to remember when people bought homes and got student loans with much higher interest rates than we've been used to. But people have the memories of goldfish, and rich people hate the thought that they might not have as much wealth as they did before, so rate hikes it is.

Ok Bo0mer, those high interest rates were on balances exponentially lower than the prior low interest balances

Not even close to being a Boomer, but thanks for proving my point about people's lack of memory!

+1. I remember too and I’m a young Gen X, almost a millennial.

[Anonymous]

Anonymous wrote:Interest hikes decrease demand by making debt more expensive.

I still have to eat and drive. That demand doesn't change.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Interest hikes decrease demand by making debt more expensive.

I still have to eat and drive. That demand doesn't change.

But what/where you choose to eat/drive and how often you do so is impacted.

Interest rate hikes decrease demand by inceasing overall costs.
Interest rate cuts increase demand by decreasing overall costs.

It doesn't apply just to consumer spending. It also applies to business spending.

Interest rate hikes incentivize saving.
Interest rate cuts incentivize spending.

In the 20th Century the Fed used to raise rates when there was a lot of economic growth and lower them when there wasn't. Then the GFC happened and we've had almost two decades of free debt since then.

[Anonymous]

It will cool off the housing market which has a big effect on many housing related industries. Demand has way outstripped supply and the industry needs to catch up. All borrowing costs will go up which will temper demand.

[Anonymous]

Anonymous wrote:It will cool off the housing market which has a big effect on many housing related industries. Demand has way outstripped supply and the industry needs to catch up. All borrowing costs will go up which will temper demand.

And I'm going to be looking for a bargain investment property.

[Anonymous]

Anonymous wrote:It will cool off the housing market which has a big effect on many housing related industries. Demand has way outstripped supply and the industry needs to catch up. All borrowing costs will go up which will temper demand.

Pipe dreams, because the stockification of the housing market is currently taking place + AirBnB renters will buy up all the properties if they fall:

https://arrivedhomes.com/

First time buyers will have to compete with companies worth billions of dollars who want to buy homes to turn them into rentals and sell the shares via outlets like arrived.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It will cool off the housing market which has a big effect on many housing related industries. Demand has way outstripped supply and the industry needs to catch up. All borrowing costs will go up which will temper demand.

Pipe dreams, because the stockification of the housing market is currently taking place + AirBnB renters will buy up all the properties if they fall:

https://arrivedhomes.com/

First time buyers will have to compete with companies worth billions of dollars who want to buy homes to turn them into rentals and sell the shares via outlets like arrived.

WFH was all that could save us, to allow people to live anywhere in our crazy large country and build new homes cheap. But that dream is dying.