There's a generation of consumers out there that can't fathom 8% interest, much less 1981's peak of 18.2%, but the days of free or cheap money are coming to a rapid close. With national debt ballooning, inflation looming, and government props that suppressed interest rates ending, the cost of credit is headed for a long upward climb, reports the New York Times.
Mortgage rates, at 5.31%, are already up a half-point since December, and experts expect they may hit 6% before year's end. Credit card rates are on the rise, as are those on car loans. Predictions on rate jumps range between a half-point and a point and a half by the time 2011 rolls around, and there's likely no stopping there. “Americans have assumed the roller coaster goes one way,” says one investor. “It’s been a great thrill as rates descended, but now we face an extended climb.”