Your borrowing costs could rise even though the Federal Reserve did not raise its benchmark rate on Wednesday.
The economic recovery has caused rising prices, which have opened the door for the central bank's decision to stop buying bonds last year. The central bank stated that interest rates would remain near zero for the moment, but the tapering off of bond purchases is the first step towards interest rate increases.
This alone could impact the interest rate on your car loan, credit card, and mortgage.
Yiming Ma, assistant finance professor at Columbia University Business School, stated that tapering will increase yields over the medium- to long-term, which will lead to higher borrowing costs.
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Homeowners have the unique opportunity to refinance their homes or borrow money from them at record-low interest rates.
According to Bankrate, the average fixed-rate 30-year mortgage rate for a home is 3.03%. This is the lowest level since February.
Greg McBride (chief financial analyst at Bankrate.com), stated that "Refinancing" is the most important step most households can make.
"The ability to reduce your monthly payments by $200 gives you some breathing space in a time when so many other expenses are rising."
