Federal Reserve announces interest rate hike
By Bianca Buono
@BBuonoABC6
America’s interest rate is rising for the first time in nearly a decade. The rate is going up a quarter of a percentage point.
"We have seen a little bit of a rush lately in terms of people looking to lock interest rates,” said David Currie, President of Province Mortgage Associates, Inc.
He has seen a recent rush to convert variable interest rate loans to a fixed option. That was all in anticipation of Wednesday’s big announcement by Federal Reserve Chairwoman Janet Yellen.
"The committee judged that a modest increase in the federal funds rate target is now appropriate,” announced Janet Yellen.
The central bank had been keeping its interest rate close to zero since 2008 in an effort to stimulate the economy.
This new interest rate hike is the first since 2006. It’s a sign that America’s economy has healed since the recession.
"It’s a positive sign. It means that the Federal Reserve and Janet Yellen think that the economy is strong enough to handle, again, what is going to be a very very modest rate increase,” said Dr. Sylvia Maxfield, Dean of the Providence College School of Business.
"Obviously for anyone in fixed rate mortgages already, it doesn’t affect them at all. If you’re in an adjustable rate mortgage, you’re going to see your interest rate increase most likely depending on when that loan is set to increase,” Currie said.
The hike does not only affect home owners. It applies to other loans, credit cards and savings accounts. In terms of savings, money sitting in your savings account will now gradually grow at a higher rate.
"If you have variable rate debt and you haven’t already looked into converting that variable rate debt, if it’s a student loan or a mortgage, to a fixed rate, now’s probably a good time to call your bank,” Maxfield advised.
Your wallet won’t likely feel this increase right away. Interest rates are going to gradually rise.
© WLNE-TV 2015
