Interest rates hit consumers
LOUISVILLE, Ky. — It’s been ten years since Julia King started her business King Financial Repair.
“I would love to help people and I can make bigger changes by improving credit rating than I can do anything else,” King said.
She helps clients improve their credit scores to improve the likelihood of achieving goals like home ownership. However, King said today’s rising interest rates make that more difficult.
This week, the Federal Reserve approved a 4th consecutive three-quarter point rising interest rates. He is doing the sixth hike this year.
“Rates are 50% higher for an auto loan now than they were in January. An average house in Louisville this summer was $300,000, so in January it would have been $1,800 a month and now that will cost $2,400 a month at age 27,” King said.
King says rising interest rates are also keeping people out of home ownership.
“People who were originally eligible for loans are no longer eligible for those same loans, so they have to opt out and then try to find a lower value home because they haven’t been able to lock in their interest rates, ,” King explained.
Rising rates and inflation are a terrible mix for its customers who try to limit their credit card usage to less than 20% of purchases.
“That’s what mortgage applications they’re looking for in order to get a higher score. They can’t because they go to the grocery store and put it on their credit card or don’t feed their family,” King said.
For King, the worst thing is to see his clients’ goals suspended.
“It’s scary. It really is. When people aren’t able to buy a house and they’re still renting, they’re not able to create generational wealth and break that cycle for their family,” King concluded.
She fears that if rate hikes continue, more consumers and families will feel financial hardship.