Will S&P's Downgrade Increase U.S. Home Mortgage, Auto Loan Interest Rates?
By IBTimes Staff Reporter | August 6, 2011 11:04 AM EDT
A question that's no doubt on the mind of many American citizens/investors following Standard & Poor's (S&P) historic and controversial downgrade of the U.S. Government's credit rating to AAA to AA+ is, "Will the S&P downgrade affect interest rates in the United States and the interest rates I pay?"
The short answers to the two-part question are: 1) yes and 2) probably.
A Downgrade Shocker
S&P, one of three major credit rating agencies for institutions/governments, has removed the United States from its list of risk-free borrowers. Essentially, S&P, citing the ideological divide between the U.S.'s two, major political parties, the Democratic and Republican parties, has reduced its confidence in public officials' ability to manage its finances.
"The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge," S&P said, in a statement.
In other words, S&P argues lending to the U.S. Government, despite Tuesday's $2.4 trillion U.S. debt deal agreement between President Barack Obama and Congressional Republicans, carries a higher risk than a year ago.
Full article: http://www.ibtimes.com/articles/193579/20110806/downgrade-standard-mortgage-rates-car-loans-auto-loans-and-poor-s-debt-aaa-aaa-s-p-interest-ownage.htm
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