March 16 (Reuters) – The Federal Reserve raised short-term interest rates on Wednesday by a quarter of a percentage point and signaled that it plans to lift them further in the coming months to battle high inflation, a shift that will likely be felt by most households.
Higher interest rates can raise borrowing costs for consumers seeking to buy homes and cars, a shift already taking place. Those increased costs could help to cool inflation by lowering demand and slowing economic growth.
Here is a look at the various ways higher interest rates could affect borrowers.
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Mortgage rates started rising in anticipation of the Fed’s rate increases and are likely to go up further now that the Fed is bumping up short-term borrowing costs. The average rate for a 30-year fixed-rate mortgage rose to 4.27% in the week ending March 11, up roughly a full percentage point from a year earlier and the highest level since May 2019, according to the Mortgage Bankers Association.
Higher mortgage rates can increase home buying costs,…