As widely expected, the Federal Reserve raised the target range for the federal funds rate from 2.25 to 2.50%. Additionally, Fed officials now expect two rate hikes in 2019, one less than it had previously forecasted in September.

How do these rate increases affect my personal finances?
The Fed’s target interest rate is primarily used to set other ‘prime’ rates on consumer products like auto loans, credit cards and Home Equity Loans. When an increase occurs these variable rate debts generally increase by the same amount, in this case 0.25%.

Is there any impact on my current mortgage?
If you currently have a Fixed mortgage, there is no impact with these increases, as you are already locked into that fixed rate for the full term of the loan. If you have an Adjustable Rate Mortgage (ARM), check with your current loan servicer as this may impact your rate and payment.

What about if I am currently shopping for a home?
Fixed mortgages are typically based on long-term rates, which are not directly affected by Fed rate changes. However, Fed policy does influence mortgage rates, which can rise in anticipation of future Fed action. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time.

To hear more about the impact of this breaking industry news, or to discuss the importance of a rate lock, contact an HFG Licensed Mortgage Professional near you!

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