These can be confusing because most articles fail to discuss the impact on your life. The prime interest rate is the rate the Federal Reserve charges financial institutions to borrow from it. It influences many financial prices, many of which only concern economic enthusiasts. Here are some ways the prime rate hikes can affect your life!
Many people opted for adjustable-rate mortgages (ARMs) when interest rates were historically low. These mortgages offer better rates for an introductory period before they adjust to a new rate, which is partially determined by the Federal Reserve rate.
The Federal Reserve plans to continuously increase interest rates as the economy improves. Consequently, your adjustable rate will likely increase, and your monthly mortgage payment may become unpredictable. Fortunately, you can still refinance your mortgage into a fixed-rate loan and take advantage of still-low rates right now. If you need any assistance exploring your options, PrimeWay Federal Credit Union can help you figure out what is the best financial move for you and your family. Click here for more!