Interest Rates May Be On The Rise

Consumers could soon feel a financial pinch due to increasing loan interest rates resulting from the U.S. government's rating downgrade by Standard & Poor's, the Wall Street Journal reports. The downgrade means Treasury yields will likely rise eventually, causing consumer rates to increase.

However, those increases haven't happened yet, because Treasuries rallied most of last week, increasing prices and decreasing yikes as investors played it safely because of losses in the stock market. According to the Journal, that trend could continue in the near term, although that's not a popular forecast.

Based on historical correlations of what borrows pay and what the government does, the Journal believes car loans will continue rising - even before the downgrade, the average rate for a five-year loan on a new car was up to 5.6 percent from 5.44 percent the previous week. Because credit-card holders pay a rate made up of the prime rate, card issuers will likely issue new cards with higher rates, the WSJ reported.

And while the future of home loans is iffy, the news source said it's believed that they also will rise. However, the Federal Reserve recently vowed extra effort to keep rates at near-historic lows through the first half of 2013, Reuters reports. According to LendingTree.com, average rates for a 30-year fixed-mortgage loan are around 4.5 percent, which is the lowest level of 2011, Reuters added.