Interest Rate Basics
What to expect as interest rates rise.
It is expected that the Federal Reserve will start increasing interest rates in March in order to help cool the economy and temper inflation. How will this affect you? Here are some of the key areas to consider when anticipating rising interest rates.
With increased interest rates, borrowing will become more expensive. And so, if you are in the market for a new loan, expect higher:
- Home Mortgage rates
- Home equity loan rates
- Car Loan rates
- Student Loan rates
For non-fixed loans that you already possess, rising interest rates will make these variable-rate loans more expensive. Think adjustable-rate mortgages or home equity lines of credit. Also, credit card rates will increase as interest rates rise.
Of course, rising interest rates can also lead to opportunities. For one, those with savings accounts will see a rise in the interest rate that banks pay on deposits. However, there is typically a lag between increased loan rates and the increase that eventually trickles down to savings accounts. But, hang in there!
Here’s another opportunity to consider. With rising interest rates, investment in Treasuries and other securities becomes more attractive often increasing the amount of foreign investment into the United States. This makes the dollar stronger compared to other currencies, which in turn, positively affects trade. With a stronger dollar, imported goods are less expensive and exported goods reap higher rewards.
Final Thoughts
As March approaches, we will continue to provide information on the Federal Reserve and their policy decisions. Please reach out to us with any questions you may have. We are here to serve you!
Disclosures:
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All indices are unmanaged and may not be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performances not indicative of the performance of any investment.
Past performance is no guarantee of future results.
Investment advice offered through Shepherd Financial Partners, LLC, a registered investment advisor. Registration as an investment advisor does not imply any level of skill or training.
Securities offered through LPL Financial, member FINRA/SIPC. Shepherd Financial Partners and LPL Financial are separate entities.
Additional information, including management fees and expenses, is provided on Shepherd Financial Partners, LLC’s Form ADV Part 2, which is available by request.
This information is not intended to be a substitute for individualized legal or tax advice. Please consult your legal and/or tax advisor regarding your specific situation.
Tracking #: 1-05246907