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How Higher Rates Touch Consumers, Firms, Investors

â¿¿ CONSUMERS.

The main impact on consumers will likely be higher mortgage rates. Rates on auto loans, student loans and credit cards probably won't rise much soon. They're more closely tied to the short-term rate the Fed controls. That rate isn't expected to rise before 2015.

The average rate on a 30-year mortgage jumped from a record low of 3.31 percent in November to 3.98 percent last week, according to mortgage giant Freddie Mac. That's the highest point in more than a year.

Mortgage applications fell 3.3 percent last week, according to the Mortgage Bankers Association, though they're still up from their level a year ago.

But economists say the housing recovery can withstand higher rates. At an annualized rate, sales of previously occupied homes topped 5 million in May for the first time in 3½ years.

Steady job gains and solid consumer confidence should fuel sales in coming months, even if rates are higher.

"It's that improving economy that's bringing people back into the housing market," said Greg McBride, senior financial analyst at Bankrate.com. "The recent rise in mortgage rates does not negate that."

The biggest barrier for many home buyers has been difficulty obtaining a mortgage. Banks have tightened lending standards since the financial crisis erupted in 2008. Higher loan rates would allow banks to make more from mortgage lending and could lead them to lend more freely.

"The irony is that higher rates are likely to mean more people can get mortgages," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

â¿¿ SAVERS.

Higher rates generally benefit those with much of their money in savings. They can earn more on bond investments, CDs and savings accounts.

But savers aren't likely to enjoy much benefit soon. Banks already have plenty of deposits, McBride said. They don't need to boost rates on CDs or bank accounts to attract more cash.

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