Q: How does the recent Federal Reserve rate cut affect me?
A: The best answer is “It depends.” If you are borrowing money, mortgage rates are at near historic lows. Although mortgage rates do not move identically with the Fed Funds Rate, they are influenced by some of the same factors. The 30-year fixed-rate mortgage today is about 1% less than what it was a year ago, so consumers may want to explore refinancing. Furthermore, the interest rates on home equity loans, personal loans or adjustable-rate mortgages may decrease.
If you have credit card debt, you probably won’t see much, if any, decrease in rates – which is unfortunate because credit card rates are near record highs.
If you have a savings account, you already know that the interest rate is historically quite low and will likely decrease. With that said, some experts believe that the lower borrowing costs actually “encourages” consumers to take on additional debt rather than save money. Please don’t let the low savings rate prevent you from building an emergency reserve fund that covers three to six months of living expenses. If (and when) “life happens” or the economy takes a turn, the emergency cash reserves will allow you to weather the uncertainty with less stress.
Contact Lisa Isaacson to learn all Alpine Bank Wealth Management has to offer you. Call her at 970-369-5031 or email her: [email protected]