Predicting Interest Rate Trends Can Be Tricky Business
With more than four decades of commercial banking experience serving in a variety of senior management and leadership roles,
How do interest rates work for mortgages, car loans and small business loans?
First-mortgage Interest rates are typically driven in large part by the 10-Year Treasury Bond rates, which are influenced by trends and/or projected trends within the economy, including inflation rates, which have been relatively low for many years. This has resulted in the low-interest rate environment over the past seven to eight years (post-recession).
Whereas second-mortgage interest rates, particularly home equity lines of credit, are often times driven by the
Short-term interest rates are also often used by the
Car loans and small business loan interest rates can be influenced by both of these.
When is the best time of year to take out a loan?
Time of the year does not typically impact interest rates and unless you have the magical crystal ball, trying to time that part of the market is going to be very difficult.
Keep yourself informed on announcements by the
A good example occurred in late 2018 when most people following the market projected short-term interest rates to continue to rise in 2019, but as we saw the second half of the year, those short-term rates declined, while longer term rates did not rise as anticipated and actually saw a decline in interest rates, such as residential first mortgages.
What are three tips you would give a consumer shopping for the best rate and terms to start the new year?
1. If you are looking at longer term financing needs and thinking about making a purchase, such as a home or commercial property, the market is very attractive today.
2. Take a look at your current assets and liabilities and assess where you stand today versus where the market is currently.
3. Then consult an experienced, trusted financial adviser for guidance relative to your financial plans.
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