COMMENTARY | The Federal Reserve’s decision to maintain low interest rates in these economically difficult times is the best thing to do for this country. Raising interest rates would simply make the situation even worse.
Home buying is the biggest source of income and investment in this society. It is known as the “American Dream.” There are so many entities involved in the home-buying process; if interest rates were increased, the results would be devastating.
People would lose their homes because of an inability to keep up with their mortgage rates. During these times, it is not possible for people to go out and secure a second job if they fall a little behind. It takes, on average, about 40 weeks for a person to find employment. A mortgage payment can’t be put off for that long. By the time you would secure supplemental income (that is, if you do secure supplemental income), it will be too late. You will lose your home by the time you find an extra job.
If people can’t maintain their homes, let alone purchase a home, employees of mortgage companies (wholesale and retail), real estate agencies, title companies, appraisers, inspectors, attorneys and notaries — just to name a few — will lose business and have to lay people off.
Recent university graduates who required student loans to be able to go to school will have to worry about the interest rates as well. This will affect the amount of money owed backed to the banks. In order to have a decent career these days, you have to at least earn a bachelor’s degree. It is becoming a standard.
The thing is, no one wants to pay back these loans for years and years to come. The higher the interest rate, the longer it will take for you to pay your loans back. Being a student, this fact weighs heavily on my mind. I know firsthand people who will not go to a school of higher education if it requires them getting a student loan. If the rates get increased, this will probably deter more people from obtaining a degree of higher education.
Also affected would be credit card interest rates. This would affect most of our general population. People use credit to survive these days. They use credit to purchase food, gas and other essentials. Let’s face it: We are a credit dependent nation. Higher interest rates would cause even more dependence upon credit for American citizens. We will never be able to wean ourselves off of our excessive credit use with higher rates.
It is safe to say that the Fed made an excellent decision for the good of the American citizen by not raising interest rates.