Rapid Rise in Rates

It’s no secret mortgage rates have gone up considerably. In fact, since January 1st, rates have increased more than 2%! It’s the fastest rate rise in several decades. What does this mean for you?

Folks Impacted

• Refinance Candidates - rate/term refinances for lower rates are almost non-existent these days. Really the only reason folks may want to refinance these days is to acquire cash-out from equity in order to payoff debt, finance other purposes, and consolidate HELOC’s (which are also pressured by rate increases due to their variable nature)
• Purchase Candidates - rate increases certainly impact purchasing power. However, the silver lining might be a better supply/demand balance allowing buyers to have a better change at offer acceptance. We wouldn’t suggest expecting a significant drop in prices, however, as supply chain issues are still impacting builders’ ability to keep up with demand.
• Debt Holders - rate increases directly impact credit card rates and other borrower rates. Therefore, holding debt may cost these folks more as rates continue rising.
• Asset Holders – savings account rates should be increasing, providing higher rates of returns for those with money in these accounts. Higher rates can also help returns on investments like I-Bonds.

 
Future Rate Outlook
The FED just raised its overnight lending (Fed Funds Rate) by .5% yesterday, and is saying it still expects to raise rates several more times in 2022.
 
These rate increases are used by the FED primarily to fight inflation. However, it will be interesting to see how the FED acts moving forward as too many rate hikes or too much aggressive action can also force our economy into a recession.
 
Contact us if you have questions as it pertains to how rate increases affect you specifically…we’re happy to help!