USA TODAY US Edition
WINNERS AND LOSERS
Who would get some help, and who would see increased costs under higher rates? Here are some winners and losers:
Though it’s a bit counterintuitive, higher interest rates could actually be good for sales initially. “It may cause a flurry of activity as buyers look to get in a new home before future rate hikes hit,” said Whitney Fite, president of Angel Oak Home Loans in Atlanta.
Even if a small rate increase happens, mortgage rates are still near “historically low levels,” Fite added, so prospective home buyers shouldn’t fret.
SHOPPERS WITH GOOD CREDIT:
You should still expect to see 0% APR promotional deals at car dealerships and furniture stores, Greg McBride of Bankrate said. “Those with good credit or who shop around will always get attractive promotional offers.”
In the low interest-rate environment since the Great Recession, banks suffered low margins on loans. To prop up those margins, McBride said, banks will likely hike lending rates while leaving rates on CDs and other deposits pretty flat. Expecting better savings rates because of a move by the Fed is “a recipe for disappointment.”
BORROWERS WITH VARIABLE-RATE DEBT:
While those with adjustable-rate mortgages, student loans and home equity lines of credit may not see bills jump in short order, a steady rise in rates coupled with the long-term nature of these loans will “feel like death by a thousand paper cuts,” McBride said.
MORTGAGE HOLDERS WHO HAVEN’T REFI’D:
A few percentage points in interest can add up big over the long term, Fite said. But if you didn’t take advantage of super-low rates in 2014 or early 2015, your window may have permanently closed to get those more favorable rates.