The Federal Reserve announced it is raising the federal funds rate by 0.25 percent Wednesday. This is the first increase since 2006.
The benchmark interest rate affects rates on a number of things– including mortgages, car loans and credit cards. According to financial experts in Pocatello, the hike won’t be affecting consumers too much.
Ed Tierney, the vice president of mortgage lending at Idaho Central Credit Union, said the housing market has been anticipating this increase. Also, the increase isn’t significant enough to slow the market down.
“A lot of people, like first-time home buyers, pretty much do a 30-year mortgage,” Tierney said. “A small incremental move like this one (totals up to) $20 more. It doesn’t usually stop people from buying a house.”
For car loans it’s a similar story. Finance manager Brett Smith with Cole Chevrolet said the increase would translate to around $3 to $4. That said, it’ll be business as usual at car dealerships.
“It’s nothing to worry about at all at this point. The rates are so low and the market is so competitive for those auto loans,” Smith said. “Somebody is going to get you a rate you can afford if you have good credit. Even if you have marginal credit, it’s not going to be a problem.”
Fed Chair Janet Yellen also said gradual increases will follow this initial hike, each time by 0.25 percent. If it gets to 1 percent by next year, you could see adverse effects.
“That can make a significant difference in your payment,” Smith said.
Credit card interest rates only won’t increase if the interest rate for the card is fixed.
Fed policymakers have said they will pull back on those increases if the economy falters.