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The Federal Reserve has increased rates by .25%. This is the first rate hike since December, 2017.  

How will the increase affect you?

An increase to the Fed's key short-term rate usually causes consumer interest rates to increase; however, the impact really depends on the type of debt. 

For example, credit card rates move in concert with the Fed's key short-term rate so that a 0.25% increase will nudge a credit card's APR upward by the same amount. 

Other types of debt, like mortgage interest rates, aren't as closely aligned with the Fed's key short-term rate. Mortgage rates tend to be influenced by inflation and mortgage backed securities. 

Mortgage rates are still historically low. Can you take advantage? 

Some analysts who are closely monitoring mortgage rates predict they will increase throughout 2018 and approach 5% by 2019. 

 (Rates shown in the chart above are for educational purposes and do not reflect current market rates/APRs.) 

Given that home values are rising in a number of markets, refinance transactions continue to make sense to many consumers who are 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 rate that is lower than their current rate  
  • Remodel their home 

If you're considering refinancing your home and would like to understand the costs and benefits involved, don't hesitate to reach out to me today. 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.  

*Debt consolidation does not pay off the debt, please consult a financial advisor regarding the effect of consolidating short-term debt into long-term debt. This material is informational only and not an advertisement to extend credit as defined by TILA/Regulation Z nor an application for credit as defined by RESPA/Regulation X. All applications are subject to underwriting approval and determining applicant’s ability to repay. Not all applicants are eligible for or qualify for all loan products offered. All loan programs, terms and conditions are subject to change without notice. Rates and terms are valid as of the date of printing/distribution.

Posted in:Rate Hike 2018 and tagged: Rate Hike 2018
Posted by Tenby Dahman on March 21st, 2018 2:44 PM



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