MIDDLETOWN, Pa. (WHTM) – Chris Dixon says he knew a federal interest rate hike was coming.
“They probably could’ve done it last time they met,” he says, sitting at his desk in the Middletown office. The financial advisor with Edward Jones says midstate investors and others will feel different effects, depending on their situation.
“If you have any kind of loan with a financial institution, whether it be a mortgage, an adjustable rate mortgage, which you call and ARM, or a home equity loan,” Dixon warns. “You want to keep a close eye on those statements over the next couple of weeks and months, because most likely, those rates are going up.”
On Wednesday, the Fed increased rates of almost zero, by .25% percent. The adjustment of the federal funds rate can affect everything from mortgages, home equity lines, car payments and credit cards.
While Dixon says it will take time for credit card companies and banks to bring their rates in line with the Fed increase, most people can expect to see higher payments on affected loans within one to two statement cycles.
Exactly how much more someone can expect to pay per month will be determined by their current interest rate and the amount they owe.
While debt holders may feel the pinch, Dixon says rising interest rates are a positive sign for investors, and those with significant savings account balances.
“It’ll be nice to finally see clients be able to make money on their money,” adds Dixon. “CD rates have been very low everywhere. Many markets have been low. It’ll be nice to finally get a rate of return on your money.”
While the stock market was positive on today’s news, Dixon says the changing rates will cause concern for some investors, especially those with stock-heavy portfolios.
“The fact is, the market tends to be a little bit more volatile in a rising interest rate environment,” he adds. “So, that means that people need to make sure they have the proper mix of stocks versus bonds.”