Get Ready to 'Downsize' Your Entire Life Amid Unrelenting Inflation, Kevin O'Leary Warns The Federal Reserve announced it would maintain the federal funds rate last week.
- Mortgage rates have increased from 4.5% to 8% in just two years, which means larger homes won't be as affordable, O'Leary said.
- Americans are also worrying about inflation's squeeze on car loans, energy and groceries, O'Leary said.
Image Credit: Bloomberg | Getty Images
Just two years ago, you could get a mortgage at 4.5%, whereas you're "lucky" to lock one in at 8% now, O'Leary explained. "So that means the size of the house you're going to buy is 20 to 25% smaller," he said. "That's a downsize."
Last week, the Federal Reserve announced it would maintain the federal funds rate in a range of 5.25% to 5.5%, holding steady for the second consecutive time since it moved the benchmark interest rate in July, CBS News reported.
"Inflation has been coming down," Fed Chair Jerome Powell said at a press conference following the decision, per Reuters, "but it's still running well above our 2% target ... A few months of good data are only the beginning of what it will take to build confidence."
But the need to downsize won't end with the housing market, O'Leary warned on the program. "You want to borrow for a car? Sorry, that's 8 to 9%. Used to be five," he said. "So, smaller, less expensive car. That's happening at the same time."
The rising cost also impacts energy and "hits you every day at the grocery store," O'Leary told the outlet.