What Rising Interest Rates May Mean For You
In an effort to quell inflation, the Fed increased policy rates by 0.75% at their most recent meeting. This is the largest increase since 1994 and more than initially expected. Mortgage interest rates had already moved upward in anticipation.
It is expected the Fed will continue moving rates on an upward path at each successive meeting of the Open Market Committee, so long as conditions warrant. Most analysts anticipate the increases will continue until the Fed has met its directive of containing inflationary forces in the economy.
Background on the Fed
- The Federal Reserve Board (the Fed) controls the federal funds rate and discount rate, which are charges for overnight loans from bank to bank or from the Fed to member banks.
- The rate was lowered to near zero in March 2020 in response to the pandemic. These historic measures are now being reversed.
- This is the third increase this year.
What this may mean for you:
If you are planning a home purchase or any type of refinancing, including accessing cash from your home’s equity, it may pay to act before further increases. You may want to explore alternatives, such as a lower rate or hybrid adjustable mortgage (ARM).