The Feds alluded to that potential interest rate hikes will occur in 2022. “Hikes” with an “s” as in plural. This is to help with reducing the rise of inflation. What does higher interest rates mean? It means that the cost of borrowing will get more expensive. If the Feds raise interest rates 3 times next year, what could that mean for you? Get ready in 2022, interest rates are likely going up.
Higher rates means it’ll cost more to borrow money. If you plan to buy a home with a mortgage, you’ll be paying more in interest. If you are buying a car with an auto loan, you’ll be paying more in interest. If you plan to take out a personal loan, it’ll cost you more. Your credit card rate will go up so if you are not paying your balance in full, you’ll be paying more each month. From a consumer standpoint, you may think twice before taking out a loan or borrowing on credit.
Consumer spending could go down because it costs more money to borrow which could lead to less spending. Less spending on goods can decrease company revenues. Lower revenues and profits could lower stock prices. I say the word “could” because I can’t predict the future. Do I want the stock market to go down? Not at all.
Higher interest rates isn’t all bad news. If you have a saving account, you know that you’re not making much from the interest. With interest hikes, savings rates will go up and you’ll get more from your savings.
If you’re in the market to buy a house, higher rates may help you out. Higher rates could slow the housing market that could result in homes being on the market longer and having a higher supply.
If you have been debating whether to refinance your mortgage, you might want to start thinking about it harder before the rates go up. Mortgage rates are still low compared historically but if you have an opportunity to lock in a lower rate, now might be the time.
Higher interest rates isn’t all negative. Depending where you stand financially, this could be a good thing or a bad thing. Knowing how rising interest rates could impact you and your financials is good to prepare for. Interest rates are going up in 2022 likely. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.
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