The Patriot Post® · RNC: No End in Sight for Biden's Sky-High Interest Rates

By the Republican National Committee

HIGHER INTEREST RATES ARE CRUSHING AMERICANS

• Biden claims that Bidenomics is just another way of saying “restoring the American dream¹,” yet his policies have put this dream increasingly out of reach² for millions of hardworking Americans.
• More and more Americans are struggling to take out a mortgage³, finance a vehicle⁴, and perform various other financial transactions because of Biden.
  • Faced with higher interest rates, business plans are being put on ice⁵ and Americans are agreeing to loan terms⁶ that would have been unimaginable under Trump.
• This is a direct result of Bidenomics – Biden fueled inflation, which forced the Fed⁷ to raise interest rates.
  • Between 2022 and 2023, the Fed raised interest rates 11 times⁸ 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 rates⁹ anytime soon as inflation persists well above the two percent target.
• The cumulative effects¹⁰ of these interest rate increases are squeezing Americans’ finances, punishing¹¹ low-income and younger Americans.
  • Financial Advisor at Harris Financial Group James Cox¹²: “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 Dream¹³.”
• Vice President Harris claims that the Biden administration is “helping more people buy a home,” but that couldn’t be further from the truth¹⁴. 
• Thanks to Bidenflation, working-class Americans face surging home prices¹⁵ and rising mortgage rates¹⁶, leaving many unable to afford buying a home.
  • In October, U.S. mortgage rates reached their highest in more than 23 years¹⁷.
  • According to Freddie Mac, the average 30-year fixed mortgage rate has more than doubled¹⁸ 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 $71,000¹⁹ in purchasing power since last April.
• Homebuyers are increasingly being priced out of the market²⁰, denying them the ability to build wealth²¹.
• On top of higher mortgage rates, Biden wanted to punish responsible Americans²² by forcing borrowers with good credit scores to pay an additional fee in order to subsidize riskier²³ borrowers.
  • This was only rescinded²⁴ after severe backlash²⁵.

OWNING A CAR IS BECOMING INCREASINGLY UNAFFORDABLE

• Only 10 percent²⁶ 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 $100,000²⁶ to afford a car.
• The average car payment, now well over $700²⁷ per month for a new vehicle, has reached a record high due to a spike in auto loan interest rates.
  • Roughly one in three²⁸ car buyers are now taxing out six- to seven-year loans on used vehicles to help lower monthly payments.
    • In 2004, only 1 percent²⁹ of auto loans lasted six to seven years.
  • The average auto loan debt grew by 5.2 percent³⁰ in 2023, with total auto loan debt climbing to $1.51 trillion.
    • Auto loan debt grew among all credit scores³⁰.
• These buyers are forced to pay higher loan rates as a result of higher interest rates by the Fed.
  • The average loan rate³¹ 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 record³² at the end of 2023.
  • The average used car loan is now 125 percent³³ of the car’s value, which can leave borrowers owing more³⁴ on a car than its present market value.
• Higher rates are causing more drivers, particularly young drivers, to fall behind on their car payments³⁵.
• For those who can afford the average monthly payment of $736, they will pay nearly $9,000 in interest³⁶ alone over the life of the average loan.
• Lenders are tightening the terms³⁵ 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 delinquency³⁷ 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 prices³⁸ up over 50 percent³⁹ 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 high⁴⁰.
  • When the federal funds rate rises, the prime rate follows suit⁴¹, 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 bills⁴².
• The average credit card interest rate is now at a record high⁴⁰, according to the Consumer Finance Protection Bureau.
  • Credit card rates are one of the fastest ways⁴³ 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 high⁴⁴, and more people are carrying debt month to month.
  • Americans are increasingly relying⁴⁵ 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 rates²⁸.”
• Americans are also increasingly racking up “phantom debt⁴⁶” 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 rates⁴⁷ on a 5-year variable-rate private student loan currently⁴⁸ 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 percent⁴⁹ – just three years ago, rates were below 3 percent.
  • This is the highest level⁵⁰ that most undergraduate borrowers have faced since 2013.

Originally posted here⁵¹.