Households Better Prepared for Rate Increases This Time

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Posted To: MND NewsWire

Earlier this week Freddie Mac asked if the housing market recovery could withstand a rate increase (the answer, with some qualification was yes). Now the economists at Wells Fargo are asking the same about household balance sheets. The banks Interest Rate Weekly concludes that should the Federal Reserve begin to increase rates as expected it will have a "muted" impact on households. The balance sheets of households are critical to the economy as a whole given their importance to growth in consumer spending. Households are less leveraged than they were in past tightening cycles and thus in a better position to withstand the higher rates. Financial obligations for debt, property taxes and lease payments currently stand at 15.3 percent of disposable income, a level consistent with the record lows...(read more)

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Source: http://www.mortgagenewsdaily.com/05202015_rate_increases_consumers.asp

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