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.
  • Between 2022 and 2023, the Fed raised interest rates 11 times to combat a 40-year high in inflation.
  • Despite hopes that interest rates would fall this year, the Fed has indicated that it doesn’t plan to cut rates anytime soon as inflation persists well above the two percent target.
• 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.
  • This was only rescinded after severe backlash.

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.
  • Following standard budgeting advice to not spend more than 10 percent of monthly income on car-related expenses, Americans would need an income of at least $100,000 to afford a car.
• The average car payment, now well over $700 per month for a new vehicle, has reached a record high due to a spike in auto loan interest rates.
  • Roughly one in three car buyers are now taxing out six- to seven-year loans on used vehicles to help lower monthly payments.
    • In 2004, only 1 percent of auto loans lasted six to seven years.
  • The average auto loan debt grew by 5.2 percent in 2023, with total auto loan debt climbing to $1.51 trillion.
    • Auto loan debt grew among all credit scores.
• These buyers are forced to pay higher loan rates as a result of higher interest rates by the Fed.
  • The average loan rate 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.
  • High loan rates mean higher monthly payments, with the average monthly payment to finance a new car hitting the highest on record at the end of 2023.
  • The average used car loan is now 125 percent of the car’s value, which can leave borrowers owing more on a car than its present market value.
• Higher rates are causing more drivers, particularly young drivers, to fall behind on their car payments.
• For those who can afford the average monthly payment of $736, they will pay nearly $9,000 in interest alone over the life of the average loan.
• Lenders are tightening the terms of car loans amid soaring delinquency rates, making it increasingly difficult for lower-income Americans to find a car loan.
  • Auto loans taken out in 2022 and 2023 have higher rates of delinquency as car buyers were pressed to take loans at a higher interest rate.
• Americans who can afford a car must then face the additional pain at the pump to fill up the tank, with gas prices up over 50 percent since Biden took office.

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.
  • When the federal funds rate rises, the prime rate follows suit, which credit card companies then use to set their own interest rates.
  • This means that cardholders who carry a balance month to month can expect higher credit card bills.
• The average credit card interest rate is now at a record high, according to the Consumer Finance Protection Bureau.
  • Credit card rates are one of the fastest ways 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.”
• Meanwhile, credit card debt is already at a record high, and more people are carrying debt month to month.
  • Americans are increasingly relying on credit cards to help maintain their spending, and those who weren’t able to make ends meet “are just digging themselves a deeper and deeper hole with the higher interest rates.”
• Americans are also increasingly racking up “phantom debt” through “Buy Now, Pay Later” platforms, with 43 percent of BNPL users behind on payments.

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.

Originally posted here.