Ways You Can Save While Interest Rates Are Rising

The month of December saw a slight increase in mortgage rates. With the emergence of the Omicron variant, the previously predicted rise in 30-year fixed mortgage rates took an unexpected .04% drop to 3.2%. Since then, uncertainty and rising inflation have created a tug-of-war on these rates. Now that Omicron is posing less of a threat than its previous variants, central banks and governments feel encouraged to bring back a sense of normalcy to the economy. Goldman Sachs predicts a rise of one full percentage point that will remain above 4% through the end of 2022 with 3 possible hikes taking place throughout the year. The difference--your 30-year mortgage on a $300,000 home could increase by as much as $147 per month. 

There are ways to offset the effects of this rate hike: 

Consider refinancing your mortgage to take advantage of current rates. If you have an adjustable- or variable-rate mortgage, think about switching to a 30-year fixed rate. 

Private student loans should also be refinanced. These loans do not qualify for the Biden administration's pause on payments, so this would be another great option for anyone looking to take advantage of current rates. 

Pay down credit card debt. The current average rate is 16%, and the rate hike might only be a few dollars difference, but those few dollars can add up over time. Now could be the opportune moment to consider debt consolidation options, from balance transfer cards to personal loans.

An improved credit score could keep your rates as low as possible. Focus on paying off debts with on-time payments. The best example of the impact of your credit score lies in credit cards. The same card paid off in $200 monthly installments can be several hundred dollars more costly for an individual with a lower credit score based on interest.

If you have any questions about navigating the home-buying process during these interesting new times, do not hesitate to contact The Vantage Realty Group.