How Interest Rates Will Affect You in the Coming Year

Author: |Sep 08 2020 Posted in Interest-Rates No comments

Interest rates are on the rise, and traditionally this would make us believe that we are entering a recovery period. However, I am here to tell you that it could mean otherwise, meaning that the reason behind the rates is something other than the market. The main cause now is inflation, with the price of everything going up. Turning on the printing presses isn’t helping and is simply driving up the cost of every tangible good we have.

Prices Are Going Up

Prices are going up on everything from groceries to clothing items and more. Even a simple cup of coffee has gone up in price. While the prices are going up, so are the interest rates and the combination of both could be detrimental. When things become more expensive, at least we can hope that we will have a low rate of interest, and this typically only affects us when we are looking at buying a car, a home, or even taking out a personal loan. Right now, while prices on homes are going down the price on everything else is going up. The housing market is a unique market in that it is based on its own models. However, you can see trends and how it is connected to everything else. For example, joblessness means people cannot pay their bills, and thus they are making a decision between paying their mortgage and feeding their children. So, which would you choose? Obviously you wouldn’t refrain from feeding your children, thus your mortgage will not get paid.

Interest Rates Are Going Up

Interest rates are going up on everything, and that doesn’t mean just mortgage loans. Interest rates are going up on mortgage loans, car loans, and even can affect the interest rates on your credit cards. With interest rates going up on everything this means higher payments. Higher payments affect everyone no matter how much money they make. Even living on a budget can make you question whether or not you can handle it. If you have a set budget now then you know what you have going out versus what you have coming in, and when the outgoing goes up it can throw your planning out of whack.

Everyone is affected by higher interest rates, but my whole point in what I am trying to tell you is pay off everything you can before it gets worse, and if you do have a high rate mortgage, you are better off to refinance now than continue to wait. Rates are only going to go up, and I don’t see them remaining where they are at all. While we are still waiting for the housing market to improve, we can just sit and rely on inflation to affect our housing market.