Greetings Friends!

First off, my apologies for the lack of recent posts. Typically the holidays represent a time when we can catch up on things, as folks have a tendency to take a pause when it comes to their credit. 

I don’t know if it’s the elections, the warm(er) weather, or simply an anomoly in the country, but the haitus we’ve expected didn’t come; and it’s been all hands on deck for the last few weeks. 

And we are just about to enter into the ‘busy season’… 

However, all that aside, I piece of news came across today. The much anticipated rate increase. That’s right, the feds have increased the key interest rate by 25 basis points. What does this mean?? Well, it means that the economy is improving, or at least our friends at the federal reserve think so. Such may not be the case in your part of the world, and in our part of the world, we are in a bit of a recession due to the oil industry pulling out of a lot of segments due to several factors; most of which is the price of a barrel of oil. 

Regardless, I am writing this largely because we receive several phone calls weekly by both clients and folks who just have questions, because they are concerned about the much anticipated rate increase. Typically, I ask them…

‘what is the amount of house you are considering buying..?’

Most respond in the neighborhood of $250,000.00. 

So, for the purposes of this excersize, let’s view the circumstances through that scope. 

The current rate according to google is around say.. 3.92%:

So we are currently looking at a payment of $1,182.00 for a 30 year mortgage at a rate of 3.92%

Now, when the new rate of 4.17% takes effect, that payment will change:

By $36.00. 

Now, please, understand, I am not advocating the idea of passing on a great oppurtunity to save a bit of money and get that mortgage locked in now. No question, considering over the term of the loan, that equals an additional $13,000.00 in interest. However, I do think it’s valuable to understand that there really isn’t a need to panic. A difference of $36.00 monthly is something that can be compensated for simply by say… going to Starbucks a few less times a month. 

The point is; mathmatics is our friend. And I think; I hope, after reading this, you may be comforted by the fact that the increase in lending rates isn’t the end of the world. Certainly; higher interest does result in us paying more for stuff, and that’s really no fun, but big picture? I think if we were really savvy, we could absorb this, and the next interest rate increase simply by tightening our monthly budget. 

Yes, you want to take advantage of low interest rates

Yes, you want to pay less for stuff

A 25 basis point increase, when we are talking about the lowest rates we’ve seen in several decades? Not a big deal. Truly. 

There are other ways to save a dollar a day. 

I for one have decided to use cheaper meat from the market for lunches for the office. 

Don’t tell anyone though. 

Be well, 

​Credit Dr. 

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