Interest Rates on the Rise

In this segment of Midday Money, Nancy discusses rising interest rates. Watch it online here.

Interest rates are on the rise, so we have to look at what’s going on. Right now, we’re seeing the 10 Year Treasury has increased by about 30 basis points (so that’s 0.30%). 30 Year Mortgages are up about 0.5%, and 15 Year Mortgages are up about 0.4%.

Will they go higher? The answer is probably. The Federal Reserve may increase rates in December. We think that’s going to happen right now.

Why did they go up? We’re seeing an overall improvement in the economy. We’re expecting an increased demand in borrowing. That will push those rates higher.

There’s also talk of infrastructure spending. If we have that, we’re going to see the government spending more and demanding more on the money side.

We expect inflation to come into play. We will see some wage pressures, which will mean we’ll start to see higher wages; but, of course, that means higher prices in everything across the board.

What other rates will go up? Your credit card rates will go up, and those are rates that vary. So as those rates increase, those rates on your card will adjust. Student loan rates may go up. Car loan rates may go up. The good news is CD rates may go up, so if you’re living off of that CD income expect to see that go up.

But prices on everything will go up, so what you should you do?

Lock in those low rates right now. If you’re looking to buy a house or a new car, this is the best time to do it, because the rates on those loans will go up.

Pay down those credit cards, because as those rates increase, you’re going to see more and more of that monthly bill being consumed by interest.

Shorten your maturity on any CDs that you have out there right now, and as those rates start to go up, hopefully you will take advantage of some higher rates in the future.

Any variable rate debt that you have (like the credit card or like a HELOC) where those rates can adjust to what’s happening, those are the things you need to address first and pay those down.

Don’t worry about your long-term, low rate things like the house and if you have a low rate on your car. You’ll be fine.

#interestrates #economy #financialadvisor #investmentadvisor #feeonlyfinancialadvisor

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