Fed Raises Interest Rates for Third 2017 Rate Hike

The Federal Reserve has raised interest rates by a quarter of a percentage point, ranging between 1.25 and 1.50. This is the third interest hike of 2017, and is made in confidence that 2018 will continue to bring economic growth. The Fed has also raised their projected economic growth in 2018 from 2.1 to 2.5, in part from the $1.5 trillion tax cut currently moving through Congress. Mortgage rates have hovered around 4% for much of 2017, despite the two other benchmark increases. Because of the longevity of 15-year and 30-year mortgages, they are less impacted by the raising of interest rates. Homeowners will likely not notice detrimental change because of this hike. The most vulnerable borrowers are those either seeking a new mortgage or already holding one with an adjustable rate. While mortgage rates may not be affected as quickly, the hit to American homes in other financial areas may impact the market. Credit card holders will immediately see consequences of the raise, making any of their current debt more expensive. Those paying off student loans in the form of private variable-rate loans may also see an increase in monthly payments. Heading into 2018, the Federal Reserve predicts to raise the interest rate 3 times in the coming year as the economy continues to slowly grow. Janet L. Yellen, the Fed’s chairwoman, will step down in February, inviting in new leadership and a fresh take on the Federal Reserve’s actions. Learn more.