We are definitely in a period of rising interest rates, due mostly to the government wanting to curb or control inflation.  What does that mean to average consumers.

Credit Card Debt

The first thing to think about is your short-term debt – like credit cards.  These have very high interest rates to begin with, so an increase to an already high rate can cut deep into your pocket book.  If you are carrying high interest debt from month to month, it may be time to look at eliminating that debt.  One strategy might be to refinance your house to use equity built up to pay off the high interest debt with lower interest debt.  This will significantly improve your monthly cash flow situation and reduce the stress involved with these high interest payments.  It is then very important to not allow that high interest debt to develop again.  Think about reducing your credit card limits.  Or even better, get rid of as many as you can altogether.

Mortgage

Now the big one – your mortgage.  As mortgages become due to renew, you will most likely be facing a significantly higher interest rate than you currently have, and this will increase your interest payment each month.  If you were just able to qualify for your initial mortgage, it may be tight this time around, and in fact some people may not qualify to renew their mortgage with their current lender.  Some may need to look elsewhere for alternative lenders to help them achieve a mortgage that works for them.  That is where a mortgage agent can be very helpful.  We have a lot of options that your bank does not offer.  That does not mean that your bank isn’t the best option again, and we may go that route.  But we can look at all the possibilities for you, and work with you to determine the very best solution.

Don’t Panic…

The main message is don’t panic.  Be prudent.  Reduce unnecessary debt and payments.  Perhaps think about whether you really need that new car right now, or delay that much needed vacation (or just scale it back a bit).  And remember, interest rates were around 4% just before the pandemic hit.  Life is full of ebbs and flows.  These types of changes are bound to happen and just part of the normal economic cycle.  We are here to help you roll with it.