Interest rate hike expected this week
WICHITA, Kan. (KWCH) - The Federal Reserve is expected to raise its benchmark interest rate by another three quarters of a percent this week, if not by a full point. This comes as the Fed continues to fight inflation. The situation has a direct impact, among which is 30-year home mortgage rates hovering around 6%, the highest in 14 years. That rate may increase.
Buying a home today would be much different than it was for Tim Craft who moved to Wichita in 2000.
“A 30-year mortgage was over 8.5%, so rates do go through cycles,” said Craft, an associate professor with Wichita State University’s Barton School of Business. “As I said, hopefully if inflation--especially supply-chain issues and so forth--get fixed, inflation will come down and the Fed won’t have to raise rates as much.”
With the Fed expected to increase interest rates, Craft is making it a point to remind students how those rates affect them.
“You have to worry about that 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, those interest rates are still much lower than they are for credit cards.”
At Meritrust Credit union, the rate for a 30-year fixed mortgage is at 6.125% as of Tuesday, Sept. 20. For a personal auto loan, the rate is as low as 4.5%.
“Really planning is the name of the game when it comes to our finances right now,” said Meritrust Credit Union Communications Manager Shelley Downs. “If we anticipate needing a home early next year, now is the time to sit with your lender and have that conversation about your goals.”
Financial experts say higher rates often encourage more saving and less spending.
“The only slight benefit, if you’re saving money, it could be that now banks will pay you a slightly higher interest rate on your savings, especially if you’re getting a certificate of deposit,” Craft said.
“Maybe this can all help us get into the mindset of planning, and just why it’s so important to put that pen to paper. A budget doesn’t have to be a complicated thing to do,” Downs added.
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