There is a joke on the Internet. In 2008, a foreigner brought 1 million US dollars to China, spent 400,000 US dollars to buy a house, and spent the remaining 600,000 US dollars on food, drink and fun. Three years later, the old man sold out his house and prepared to return to China. By this time, house prices had doubled. In the end, he ate and drank for free for three years and took home millions.
I don’t know if this joke is true or not, but in reality, this kind of operation is indeed very common, and Americans have done such things in the past.
Generally, this kind of thing is common in other developing countries whenever the United States cuts interest rates. The main reason is that the United States has too few investment opportunities and low interest rates. Therefore, once the interest rate decline cycle occurs, a lot of American capital will lend a lot of money to invest in developing countries.
With the inflow of large amounts of foreign capital, enterprises, property markets, and stock markets in developing countries will prosper. When everyone has money, they will increase investment, thereby further pushing up asset prices?
But if the U.S. dollar raises interest rates, foreign capital cashes out at high levels, and developing countries withdraw, what will be left behind will be a mess.
In other words, once the U.S. dollar raises interest rates, it will easily drag other countries down (you can read the previous article for specific reasons). Therefore, other countries have always been afraid of US dollar interest rate hikes.
The US dollar interest rate hike has a great impact on other countries. Is there any negative impact on them in the United States?
As U.S. dollar interest rates rise, U.S. bond yields rise, and U.S. borrowing costs also rise, putting pressure on U.S. households and businesses. For example, as interest rates rise, it becomes more expensive to buy cars, credit cards and corporate loans in the United States.
Let’s first talk about the relationship between U.S. dollar interest rate hikes and U.S. bonds: When the Federal Reserve raises interest rates or signals that it is about to raise interest rates, it means that the coupon rates of bonds issued in the future will become higher and higher. At this point, investors are likely to be tempted to sell government bonds.
To put it bluntly, it is because the yield on U.S. bonds is relatively stable and has almost zero risk. If the yield of this low-risk product suddenly increases, it will inevitably attract a large amount of capital to purchase.
It is said that so far, U.S. bond yields are still on an upward trend, and the benchmark 10-year U.S. bond yield has risen to 2.704%.
However, as U.S. bond yields rise, the cost of buying a house in the United States has also risen sharply, while the demand for buying houses in the United States has gradually declined.
For example, when the Federal Reserve did not raise interest rates at the beginning of the year, the average interest rate on 30-year mortgages in the United States was basically around 3%. Now, this interest rate has risen to 4.72%.
For this reason, many Americans who want to buy a house but feel that the interest cost is too high say: "We can only hope for a market collapse."
At the same time, the rise in interest rates has also increased Reduce the repayment pressure on home buyers. In January, middle-income households in the United States generally spent 34.2% of their total income on mortgage payments for mid-priced homes, compared with less than 30% last year.
In addition to mortgages, a sharp rise in U.S. bond yields has further raised interest rates on some debt. Such as car loans, company loans, credit cards, etc.
The current average five-year new car loan interest rate in the United States has reached 4.21%, an increase of 0.4% from the beginning of the year.
In the past, the United States gave people a lot of money because of the epidemic, but after so long, middle-class American families have basically spent all the subsidies they received under the stimulus policy.
However, the current income remains unchanged, and the interest rates on home loans and car loans continue to rise. Because of this, American consumers can only use overdraft credit cards to make up for the gap between income and expenditure and pay the extra mortgage and car loans.
For example, this year, the United States has set off another credit card consumption frenzy. In February alone, revolving credit card debt in the United States soared to $18 billion, six times higher than in January.
If the debt of demolishing the east wall to pay for the west wall continues to rise, US banks are likely to tighten credit in the future.
If the United States issues loans at an interest rate higher than the market interest rate, or even refuses to issue loans, then
So the U.S. dollar interest rate increase was originally intended to solve the problems of high inflation and low liquidity in the United States. But if it is not properly controlled, there are too many complex uncertainties that may cause a serious economic recession in the United States.
Goal-related Q&A: Related Q&A: I want to know how you, who used your credit card to buy a house, paid off your credit card and mortgage in the end?
The following answers are not absolute and may not apply to everyone. They are just personal practices. If you don’t like them, don’t criticize them!
In 2016, I was in my third year of college and interning in Shenzhen. My parents called me back and said they would buy me a suite and put it in my name! At that time, I made a down payment of 500,000 yuan, and took out a loan of 1.08 million yuan, with installments over 20 years, and the monthly repayment was 7,000 yuan!
At that time, I only had an internship for 4 months, and my after-tax salary was more than 6,000 per month. I couldn’t afford to pay it back. My parents put money on my card and paid it back for me!
Later I started working, and although I had some savings, I didn’t have to pay back a penny of the mortgage in order to fall in love. It all depended on my parents!
At that time, I applied for 6 credit cards in 2018, including Ping An, China Merchants, Pudong Development Bank, Xingye, Minsheng, and CITIC. I had a total credit limit of 210,000, and each card generally had a credit limit of more than 3. Ten thousand!
Why can I, a college graduate who has just entered the society, apply for such a high-value credit card? Ultimately, it’s because I have a mortgage and the monthly payment is relatively large!
Later, I had real consumption on these 6 cards, as well as organic support cards, and the limit increased from 210,000 to the current limit of 460,000, and two of them have reached 100,000!
But I didn’t use the money to pay off the mortgage, because my parents are both in business and don’t have to pay wages like office workers, so they are still here!
It was 2019 when I really started to repay the loan. I made an appointment to partially repay the loan and worked with my family to pay back 450,000 yuan. Because of the 7,000 yuan mortgage, more than half of the initial payment was interest, which was really too much to bear!
After paying off 450,000 yuan, the monthly payment became 3,800 yuan. I felt much less stressed, but the loopholes in the credit card were getting bigger and bigger. At this time, I started to officially pay off my mortgage. Thank you very much. My parents help me so much!
In the days to come, I can only work hard to repay it. I work in an insurance company in the morning, go home to help with business in the afternoon, chat with customers and talk about business in the evening, and work part-time on the Internet after I get home.
The various software categories on mobile phones are all designed to fill the vacancies of credit cards!
Later, in October 2019, I got married, which was another big expense. I bought three gold items, furniture, a wedding, a hotel, etc. After deducting the money collected, I still owed 80,000 yuan. Multiple credit cards.
In those days, while paying for the mortgage, raising a family, and filling in credit cards, I was really depressed. I often proposed to my parents to sell a small apartment they had invested in the city, but things didn’t go as planned!
Later, in February of the epidemic, I scraped together some more money, added 200,000 yuan to my credit card and paid off the mortgage. Now I have more than 300,000 yuan in principal left, and the monthly payment is now 2,294 yuan!
Although looking back on this journey, it has been very difficult. While constantly cashing out to cover the mortgage, I have to work hard to make money. Anyway, dead wages will definitely not be enough to satisfy the current situation, because relying on selling one’s physical strength There is an upper limit on the amount of time and work you can do, so you can only choose the sales industry where the income is not capped!
When you actually start doing it, you will find that the process is painful, but the scenery after getting through it is beautiful!