Rate hike expected this week
WICHITA, Kan. (KWCH) – The Federal Reserve is expected to raise its benchmark interest rate an additional three-quarters of a percent this week, if not a full point. This comes as the Fed continues to fight inflation. The situation has a direct impact, including 30-year mortgage rates hovering around 6%, the highest for 14 years. This rate may increase.
Buying a house today would be very different from what it was for Tim Craft who moved to Wichita in 2000.
“A 30-year mortgage was over 8.5%, so rates go through cycles,” said Craft, an associate professor at Wichita State University’s Barton School of Business. “As I said, I’m hoping that if inflation – especially supply chain issues, etc. – gets fixed, inflation will come down and the Fed won’t have to raise rates as much. ”
With the Fed expected to raise interest rates, Craft makes it a point to remind students how those rates affect them.
“You have to worry about this interest [starting] to accumulate very quickly on your credit card. For car loans and home loans, even those interest rates are going up,” Craft said. “Overall, these interest rates are still much lower than credit card rates.”
At Meritrust Credit Union, the rate on a 30-year fixed mortgage is 6.125% as of Tuesday, September 20. For a personal car loan, the rate is as low as 4.5%.
“Real planning is the name of the game when it comes to our finances right now,” said Shelley Downs, communications manager for Meritrust Credit Union. “If we anticipate needing a home early next year, now is the time to sit down with your lender and have that conversation about your goals.”
Financial experts say higher rates often encourage more saving and less spending.
“The only small benefit, if you’re saving money, is maybe the banks will now pay you a slightly higher interest rate on your savings, especially if you get a certificate of deposit,” he said. Craft.
“Maybe all of this can help us get into the mindset of planning and why putting that pen to paper is so important. A budget doesn’t have to be a complicated thing to do,” Downs added.
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