What’s going on? Federal Reserve raises benchmark interest rate
Yesterday, the US Federal Reserve announced its decision to raise interest rates by a quarter point. This is the 5th rate hike since late 2015 and there are 3 more predicted for 2018.
The Fed also confirmed that monthly roll-offs from the Central Bank’s balance sheet would step up to $20 billion from $10 billion beginning in January 2018.
What does it mean? Loans are becoming more expensive
Credit cards, HELOCS and adjustable-rate mortgages will become more expensive as they are linked to the benchmark rate.
With an overall healthy economy, low unemployment and the possibility of tax cuts led by President Trump’s tax bill, policymakers are eager to keep raising interest rates in an effort to keep things in check.
Why should you care? Tis the season for low mortgage rates
This holiday season, mortgage rates are predicted to be the lowest that they will be for a while. According to Greg McBride, Chief Economist of Bankrate.com, “the cumulative effect of the Fed’s interest rate hikes is mounting.” So while one hike may not make a huge hole in anyone’s pocketbook, with another three rate hikes expected in 2018, this dent is likely only going to get bigger.