Here’s how that Fed rate hike will impact you
With the Federal Reserve’s latest quarter-point (.25%) interest rate increase, the central bank officials now forecast two hikes next year, down from three rate raises previously projected. The decision affects rates on all kinds of borrowing, from home mortgages to credit cards. An increase to interest rates usually causes consumer interest rates to rise, but the impact depends on the type of debt. Mortgage rates aren’t as closely aligned with the Fed’s key short-term rate and tend to be influenced by other factors, such as inflation and mortgage-backed securities.
How to take advantage of today’s mortgage rates
Even though mortgage rates have been on the rise, home ownership still represents a good economic strategy, and refinance transactions continue to make sense to many consumers looking to:
- Eliminate mortgage insurance payments after achieving 20% equity
- Consolidate debt*
- Reduce their mortgage term to 15, 20 or 25 years
- Switch to a lower rate
- Remodel their home
- Convert an Adjustable Rate Mortgage (ARM) to a fixed rate
- Payoff a home equity line of credit (HELOC) that’s in the repayment period
To learn more about the Fed’s key short-term rate, check out this article published by the Federal Reserve that reviews how monetary policy influences inflation and employment.
If you have questions about your mortgage options, we are here to help. Feel free to contact us for more information.