We’ve been hearing all year that the Federal Reserve was considering an interest-rate hike in 2015. While they did not raise the rate through much of 2015, they did finally make the move to increase the rate late last week.
The good news for anyone considering whether to purchase a home or car, the rate hike shouldn’t make much difference. The rates that most people pay for mortgages, auto loans or college tuition are not expected to jump anytime soon. The Fed’s benchmark interest rate has limited influence on those things.
Still the Fed’s move to lift it’s key rate by a quarter-point to a range of 0.25% to 0.5% will raise short-term borrowing costs for banks. And that, in turn, is intended to encourage banks to boost certain other rates. Rates on credit cards, home equity loans, credit lines, and short-term adjustable rate loans, for example will most likely rise, though probably only slightly.
This is good news for consumers considering the purchase of a large ticket item, like a home or car in early 2016, is that interest rates remain at record lows. This makes locking into a 30-year fixed rate mortgage for a home purchase very attractive at this time.