No one likes hearing about federal rate hikes, but, unfortunately, the Federal Reserve did recently raise its interest rate. This means that if you, like most Americans, have a credit card, are in the market for buying a car or a house, or invest and/or save regularly, you could be affected.
While the rate hike does mean that our economy is improving, the effects a rate hike could have on you, personally, may not be good. That’s why you should be aware of the possible personal implications of a rate hike. That way, you can adequately brace and prepare for them.
Mortgage Rates Could Rise
If you’re in the market for a home, you may find that your proposed interest rate is higher than expected. While this is not always the case with rate hikes, the fact that the current rate hike came at about the same time as rising interest on a 10 year treasury bond, to which mortgage rates are related, does mean that mortgage rates are likely to go up.
With that said, though, mortgage rates are still relatively low compared to recent years, so even though you may “take a hit” on your mortgage rate, it shouldn’t be too bad of a hit.
The newly elected president is planning to dish out major money on US infrastructure, including roads, tunnels, and more. The increased spending that he is planning is likely to drive up demand for goods and thus increase and build up inflation. This, in turn, could lead to higher interest rates on credit card payments and many types of loans, which is definitely something to be aware of.
The bottom line is that, whether these scenarios apply to you or not, you may be affected, in ways you don’t even realize, by the rate hike, so it’s important to talk with your financial adviser about what kinds of things you can expect to see as a result of the rate hike.