How mortgage rates affect car purchases, credit card debt and jobs

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How mortgage rates affect car purchases, credit card debt and jobs

By Dina ElBoghdady October 9

washpost10-14-14Back when interest rates plummeted, homeowners with adjustable-rate mortgages ended up saving $150 per month on average, which dramatically reduced their chances of falling behind on their loans.

But that’s not all. The savings also led to more automobile purchases among those borrowers, less credit card debt, and more jobs in their communities, according to researchers at the University of Chicago, Columbia Business School and Fannie Mae.

This goes to show that the Federal Reserve policy that pushed mortgage rates lower all those years ago helped stimulate consumer spending and rev up the economy, just as the Fed had hoped, the researchers said in a working paper for the National Bureau of Economic Research.

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