By the Republican National Committee
HIGHER INTEREST RATES ARE CRUSHING AMERICANS
- Biden claims that Bidenomics is just another way of saying "restoring the American dream," yet his policies have put this dream increasingly out of reach for millions of hardworking Americans.
- More and more Americans are struggling to take out a mortgage, finance a vehicle, and perform various other financial transactions because of Biden.
- Faced with higher interest rates, business plans are being put on ice and Americans are agreeing to loan terms that would have been unimaginable under Trump.
- This is a direct result of Bidenomics – Biden fueled inflation, which forced the Fed to raise interest rates.
- The cumulative effects of these interest rate increases are squeezing Americans' finances, punishing low-income and younger Americans.
- Financial Advisor at Harris Financial Group James Cox: "Everyday people are suffering the most … Not only are the high interest rates gobbling up their excess income but inflation is really killing them on everyday items."
BIDENOMICS IS MAKING IT HARDER FOR FAMILIES TO BUY A HOME
- For many people, including Biden himself, "the aspiration to own a home is connected deeply to the American Dream."
- Vice President Harris claims that the Biden administration is "helping more people buy a home," but that couldn't be further from the truth.
- Thanks to Bidenflation, working-class Americans face surging home prices and rising mortgage rates, leaving many unable to afford buying a home.
- In October, U.S. mortgage rates reached their highest in more than 23 years.
- According to Freddie Mac, the average 30-year fixed mortgage rate has more than doubled since Biden took office, increasing from 2.77 percent to 7.22 percent.
- When a 30-year fixed mortgage still averaged 3.1 percent, a borrower could get a $700,000 mortgage for monthly payments of $2,989 – that same mortgage taken out at today's rate of 7.22 percent would equal a $4,761 monthly payment, which is $637,920 more over 30 years.
- Rising mortgage rates have caused homebuyers with a $3,000 monthly budget to lose $71,000 in purchasing power since last April.
- Homebuyers are increasingly being priced out of the market, denying them the ability to build wealth.
- On top of higher mortgage rates, Biden wanted to punish responsible Americans by forcing borrowers with good credit scores to pay an additional fee in order to subsidize riskier borrowers.
OWNING A CAR IS BECOMING INCREASINGLY UNAFFORDABLE
- Only 10 percent of new car listings are below $30,000, while only 28 percent of used car listings are priced below $20,000, making car ownership increasingly difficult.
<ul>
<li>Following standard budgeting advice to not spend more than 10 percent of monthly income on car-related expenses, Americans would need an income of <a href="https://www.newsweek.com/americans-can-no-longer-afford-their-cars-1859929">at least $100,000</a> to afford a car.</li>
</ul>
</li>
<li>The average car payment, now well <a href="https://money.com/average-car-payment-record-high/">over $700</a> per month for a new vehicle, has reached a record high due to a spike in auto loan interest rates.
<ul>
<li>Roughly <a href="https://www.washingtonpost.com/business/on-small-business/highest-interest-rates-in-15-years-are-derailingthe-american-dream/2022/12/19/2a16b0ba-7f86-11ed-8738-ed7217de2775_story.html">one in three</a> car buyers are now taxing out six- to seven-year loans on used vehicles to help lower monthly payments.
<ul>
<li>In 2004, <a href="https://www.cnn.com/2023/04/15/cars/car-loan-interest-rates-2023-dg/index.html">only 1 percent</a> of auto loans lasted six to seven years.</li>
</ul>
</li>
<li>The average auto loan debt grew by <a href="https://www.experian.com/blogs/ask-experian/research/auto-loan-debt-study/">5.2 percent</a> in 2023, with total auto loan debt climbing to $1.51 trillion.
<ul>
<li>Auto loan debt grew among <a href="https://www.experian.com/blogs/ask-experian/research/auto-loan-debt-study/">all credit scores</a>.</li>
</ul>
</li>
</ul>
</li>
<li>These buyers are forced to pay higher loan rates as a result of higher interest rates by the Fed.
<ul>
<li>The <a href="https://www.cnn.com/cnn-underscored/money/auto-loan-interest-rates-by-credit-score">average loan rate</a> at the end of 2023 was 7.1 percent for new car loans and 11.9 percent for used car loans – up from 6 percent and 8.2 percent in 2022, respectively.</li>
<li>High loan rates mean higher monthly payments, with the average monthly payment to finance a new car hitting the <a href="https://www.ft.com/content/d0df5df9-d6f9-43e1-a466-c1ff8d8af42c">highest on record</a> at the end of 2023.</li>
<li>The average used car loan is now <a href="https://www.autoblog.com/2023/06/22/average-car-loans-are-now-much-bigger-than-the-vehicles-are-worth/#:~:text=A%20new%20study%20from%20J.D.,the%20same%20period%20in%202021.">125 percent</a> of the car's value, which can leave borrowers <a href="https://www.kbb.com/car-news/study-average-used-car-loan-now-125-of-cars-value/">owing more</a> on a car than its present market value.</li>
</ul>
</li>
<li>Higher rates are causing more drivers, particularly young drivers, to <a href="https://www.nytimes.com/2024/03/08/your-money/car-loans-rates.htmlhttps:/www.nytimes.com/2024/03/08/your-money/car-loans-rates.html">fall behind on their car payments</a>.</li>
<li>For those who can afford the average monthly payment of $736, they will pay <a href="https://apnews.com/article/federal-reserve-interest-rates-car-loans-cost-4fc4e26e7f8985ca98eef428d9525f29">nearly $9,000 in interest</a> alone over the life of the average loan.</li>
<li>Lenders are <a href="https://www.nytimes.com/2024/03/08/your-money/car-loans-rates.htmlhttps:/www.nytimes.com/2024/03/08/your-money/car-loans-rates.html">tightening the terms</a> of car loans amid soaring delinquency rates, making it increasingly difficult for lower-income Americans to find a car loan.
<ul>
<li>Auto loans taken out in 2022 and 2023 have <a href="https://libertystreeteconomics.newyorkfed.org/2024/02/auto-loan-delinquency-revs-up-as-car-prices-stress-budgets/">higher rates of delinquency</a> as car buyers were pressed to take loans at a higher interest rate.</li>
</ul>
</li>
<li>Americans who can afford a car must then face the additional pain at the pump to fill up the tank, with <a href="https://gasprices.aaa.com/">gas prices</a> up over <a href="https://www.foxbusiness.com/economy/drives-absolutely-insane-sticker-shock-pump-gas-prices-50-since-biden-took-office">50 percent</a> since Biden took office.</li>
CREDIT CARD DEBT IS PILING UP
- The Federal Reserve's interest rate hikes have caused credit card rates to increase as well, with credit card interest rate margins at an all-time high.
<ul>
<li>When the federal funds rate rises, the prime rate <a href="https://www.experian.com/blogs/ask-experian/how-rising-interest-rates-impact-credit-cards/">follows suit</a>, which credit card companies then use to set their own interest rates.</li>
<li>This means that cardholders who carry a balance month to month <a href="https://www.bankrate.com/finance/credit-cards/what-to-do-after-card-apr-increase/#:~:text=Your%20credit%20card%20APR%20can,0%20percent%20intro%20APR%20offer.">can expect higher credit card bills</a>.</li>
</ul>
</li>
<li>The average credit card interest rate is now at <a href="https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/">a record high</a>, according to the Consumer Finance Protection Bureau.
<ul>
<li>Credit card rates are <a href="https://apnorc.org/credit-card-debt-is-at-record-high-as-fed-raises-rates-again/">one of the fastest ways</a> higher interest rates hit consumers, because unlike car loans or mortgages that are fixed-rate, higher credit card interest rates get passed through "pretty much right away."</li>
</ul>
</li>
<li>Meanwhile, credit card debt is already at a <a href="https://abcnews.go.com/US/americans-credit-card-debt-hits-record-113-trillion/story?id=106990807">record high</a>, and more people are carrying debt month to month.
<ul>
<li>Americans are <a href="https://www.foxbusiness.com/economy/more-americans-are-racking-up-credit-card-debt/">increasingly relying</a> on credit cards to help maintain their spending, and those who weren't able to make ends meet "<a href="https://www.washingtonpost.com/business/on-small-business/highest-interest-rates-in-15-years-are-derailingthe-american-dream/2022/12/19/2a16b0ba-7f86-11ed-8738-ed7217de2775_story.html">are just digging themselves a deeper and deeper hole with the higher interest rates</a>."</li>
</ul>
</li>
<li>Americans are also increasingly racking up "<a href="https://www.bloomberg.com/news/articles/2024-05-07/-buy-now-pay-later-has-americans-racking-up-phantom-debt?srnd=homepage-americas">phantom debt</a>" through "Buy Now, Pay Later" platforms, with 43 percent of BNPL users behind on payments.</li>
HIGHER INTEREST RATES ARE IMPACTING STUDENT LOANS
- Hardworking Americans who want to pay off their student loans, as well as those thinking about going to college, are getting pummeled by these higher interest rates thanks to Biden.
- Borrowers of private student loans with variable rates have been directly impacted by the Fed's decision to raise interest rates.
- Average interest rates on a 5-year variable-rate private student loan currently sit at 9.33 percent, up from a record low of 1.84 percent in 2021.
- While borrowers who took out federal student loans prior to 2022 are not affected by the Fed's actions, new batches of federal loans will hold higher rates.
- Borrowers with federal undergraduate loans disbursed after July 1, 2023 will pay 5.5 percent – just three years ago, rates were below 3 percent.
- This is the highest level that most undergraduate borrowers have faced since 2013.
