Everything seems to be getting more expensive, and now the Federal Reserve is raising interest rates in an attempt to curb record-high inflation.
"The fed raising interest rates, they're raising the short-term prime interest rate which is kind of what is tied to your credit card rates and your home equity lines of credit," explained Chris Orsini, Pacific Trust Mortgage Regional Manager & Mortgage Banker.
Orsini says 30-year fixed mortgage rates are not directly affected by the fed raising short-term rates.
But if you're thinking of refinancing your home, now is not a good time.
"Although rates right now at 6%, or wherever they are right now, are historically low, they're definitely higher than they've been in the last few years," Orsini said.
It's not all bad news for people looking to buy a house, however. Orsini says while they may be buying a house with a high-interest rate now, they could refinance to a lower rate in the future.
"Well, it's probably going to slow down the home purchases a little bit because it lessens people's buying power because when interest rates go up, their payments go up," he said.
Keller Williams Central Coast Realtor Rick Cook says he has many clients who have been affected by the increase in interest rates with one client having to significantly decrease their price range.
"With the rise in rates, he went from being worth $550,000 in purchase power to less than $440,000," Cook said.
Cook predicts there won't be any drastic changes to the housing market, but it will likely decrease demand a little.
"It's just going to slow the housing market down a little bit and so that's what we're going to see," Cook said.
Cal Poly economist Daniel Seiver says many things are about to increase in price.
"Almost all kinds of credit are going to get more expensive. If you want to buy a car, your payments are going to be higher," he said.
Seiver says the Federal Reserve is not done raising rates and they will likely continue to climb.
"So almost anything that you want to borrow money for is going to be more expensive," he said.
Seiver says all federal loans have fixed income rates so this will not affect them, but private loans can have variable interest rates so the federal increase could impact them.
He adds that the interest rate increase likely won’t fully impact the economy for another six months, and he predicts that if we were to have a recession, it likely won't happen until next year.
