Interest rates are on the rise – so what?
As we enter year three of the Covid-19 pandemic, the United States has begun scaling down its emergency economic support. One key component of this effort is rise of interest rates.
Interest rates impact the way we spend and save money. Rates were set at a historically low level in 2021 as a way to encourage consumer spending. But with increased demand and global supply shortages, we’ve seen a significant rise in inflation. So the government is taking action. Higher interest rates is one way they’re responding to slow the rate of inflation. Thus, the recent rise in interest rates could be the first of many spikes we see this year.
Such a rise could signify a return to pre-pandemic mortgage rates. This will affect the amount of house you can afford as well as how much money you can take out of your home’s equity. Hikes in mortgage rates can also impact the future value of your home. As rates continue to rise, there will begin to be more inventory to choose from because fewer people will be able to qualify -- which means houses will sit on the market longer and prices will begin to drop.
As mortgage rates increase, what does it mean for me?
Now, it is even more important to keep your credit in order. The better your credit, the better rate you will qualify for. You should maintain all open credit on time, keep inquiries to a minimum, and keep all balances at a maximum of 33% of the credit limit.
If you’re currently debating lowering your current loan rate, term, or acquiring money out of your home, now is the time to do so.