Housing Industry Quaking

The Federal Reserve announced that more interest rate increases lie ahead. This especially affects the housing sector, especially with cooling sales and new home building, and consumers’ use of home equity in their homes as opposed to an actual savings account. The slowing of the real estate market is going to affect the amount of appreciation seen on new homes as well.

When the prime Federal Interest Rate goes up, all lenders will raise their rates as well. This includes credit card and home equity lines of credit, which could lead to some sticky situations for many credit holders. As interest rates go up, home owners who have lines of credit or equity loans could find themselves in a bit of a bind come payment time. Critics have warned that if the Federal Reserve doesn’t hold off on raising rates many consumers could find themselves in serious financial straits.

This new change will affect minorities the worst, with Hispanics and Blacks feeling it the worst. The Center for Responsible Lending released a study that shows that blacks often receive loans at much higher rates than whites do, and most of the consumers on variable interest rate loans are low-income and minority families.  ■