Is It Too Late to Refinance or Borrow at Low Rates?

Is-it-Too-Late-to-Refinance-or-Borrow-at-Low-Rates-by-Darwins-Money-Blogger_image

Is-it-Too-Late-to-Refinance-or-Borrow-at-Low-Rates-by-Darwins-Money-Blogger_image

Loan Rates

There’s been a trend in recent months where interest rates have started to move up. First, by looking at U.S. Treasury bonds, there’s been a steady rise, and many other interest rates that Americans rely on routinely rise in lockstep. As a result, some may be asking whether they’ve missed the boat. Here are a few things to think about in this rising rate environment.

Mortgage and Refinance Rates

These rates follow the 10-year Treasury rate almost perfectly, so since those yields have been rising, it should be no surprise to see home loan rates moving up as well. If you were already planning on moving this summer, you may want to lock your loan, even if you have to pay a little extra to lock it for a long period of time. If you haven’t refinanced yet and can, it would behoove you to do so now. Rates are likely to be higher in the future now that the Fed has run out of options to keep interest rates low.

Home Equity Loans

Home equity loan rates often stay steady for a longer period of time and they don’t jump around daily like routine mortgage and refi rates. For instance, I’ve seen the same sign at my local bank for a 2.99 percent home equity loan rate for months now, regardless of what’s happening with interest rates in general. However, eventually they’ll move up a full point here and there. So, if you were thinking about borrowing money and have equity in your home, it might be worthwhile to lock in a home equity loan now, which is usually a very fast process.

Savers

It’s not all bad when rates go up. While borrowing rates increase, the opposite happens for savers. Their savings earns more money! While money markets, savings accounts and CDs currently pay less than the rate of inflation, once rates start to rise, these investment accounts keep up and eventually we could see the days of 4 percent savings rates and 5 percent CDs again.

While the short answer to whether it’s too late to borrow is “maybe,” the longer answer is that it will probably be even more expensive to borrow money in the future than it is now, so rather than giving up and putting off whatever goal you had in mind, it may behoove you to accelerate your plans and initiate a loan now at still-attractive rates rather than waiting months or years.

 

The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.

 

Darwin is an engineer and MBA who takes an “evolutionary” approach to finance, writing about adapting to evolving financial management, tax, investing and savings opportunities. Making more money and saving more money is an adaptive process – join the evolution! He blogs at Darwin\’s Money and ETF Base. Follow him on Twitter @ Everyday Finance.

Darwin – who has written posts on CashNetUSA Blog.


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