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Car interest rates stay high
Justin Matthews reports
TAMPA, Fla. - Inflation has been impacting consumers for about a year and a half as the prices of food, rent, gas and so many other products went up.
On Thursday, mortgage rates topped out at more than 7%; the highest they’ve been since 2002. If you’re looking to get a car, interest rates on auto loans are staggering as well.
"This is what the fed is looking for, it’s nothing that should surprise us, because the Federal Reserve wants consumers not to consume so much," said Eugenio Aleman, the chief economist for Raymond James.
READ: US mortgage rates rise above 7% for the first time since 2002
He said consumers have gotten used to generally low interest rates for the past couple decades, but this is the new normal.
"It’s going to be painful, but it’s something that needs to happen, so the fed can bring prices down," Aleman said.
More than 14% of consumers who financed a new vehicle between July and September have car payments of a grand or more per month, according to auto experts at Edmunds.
"We’re talking about almost one in seven auto loans is $1,000 or more per month, and it’s kind of crazy because for a lot of people, that was their mortgage payment, a lot of people are going to say, that was my mortgage payment 10, 15, 20 years ago," said Ivan Drury, the director of insights at Edmunds.
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The average interest rate on a newly financed vehicle is 5.7%, up from 4.3% this time last year, according to Edmunds data.
"For so many years now, people have wanted to buy a new car, we’re seeing the demand now out-strip the supply every single month, every month we are a deficit in the number of cars we can deliver to consumers, and what happens now is, they get hire, they start to weed people out," said Drury.
Economists said the Federal Reserve will keep interest rates high through at least the end of 2023.
"I am the bearer of bad news but, that news could become better news in the future," said Aleman.