| What Do Interest Rate Hikes Mean For Your Mortgage?
If you've picked up a newspaper or caught the news recently, you've probably encountered a story about mortgage rates and the Federal Reserve banking system. Like many borrowers, you might wonder how the Fed determines interest rates and how - in the event of a rate hike - your personal finances could be affected. Here's a quick overview: Banks, credit unions, and other lending institutions borrow money from Fed banks. Since they borrow these funds on a short-term basis, the institutions are charged at a discount rate that is set by the Federal Reserve Board. This discount rate has a direct effect on the "Prime Interest Rate," the rate banks charge their top-rated commercial customers for short-term loans. .
Personal finances getting 'tighter'
The succession of interest rate rises is pushing people's incomes and what they can afford, according to new figures released from the British Bankers' Association (BBA).The number of mortgage approvals dipped slightly in February, most likely after January's shock interest rate rise helped push many people to the edge of what their finances can afford.If managing your debt is proving a problem then taking a secured loan or homeowner loan could help you cut your monthly payments."[Property] demand appears to be moderating however, as the monthly number of house purchase approvals was lower than a year earlier for the third month running and net lending was below trend in February," said David Dooks, BBA director of statistics."Reflecting tighter conditions for personal disposable income, consumer credit continues to be weak," he added.Credit card lending was also weaker in February, suggesting the higher interest rates are encouraging people to move their debt onto a more affordable secured loan or homeowner loan.© Adfero Ltd .
Australian Households Positive On Personal Finance-RBA
(RTTNews) - According to the Reserve Bank of Australia, the Australian households are now taking a more cautious approach to their finances than earlier. In its half-yearly financial stability review released on Monday, the central bank said, " Households are generally positive about the outlook for their personal finances, and while mortgage arrears have increased following the general lowering of credit standards over the past decade, they remain relatively low both by historical and international standards." There are some pockets of concern, the bank said, particularly in western Sydney, and among households that took out loans with high loan‑to‑valuation ratios in 2003 and 2004. The overall over all picture however now remains, quite reassuring, the RBA observed.
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