Decorative Tilda

A continuous source of valuable financial information

What Rising Interest Rates Could Mean to the Average Individual

In September 2016, the U.S. Federal Reserve decided not to raise interest rates, instead keeping the U.S. central bank’s target range for the federal funds rate at 0.25 to 0.5 percent.

The Fed stated that they did not raise rates for a variety of reasons including the fact that the labor market is strengthening and that inflation is remaining low.1

And while the conditions under which the Fed would raise interest rates haven’t transpired, it’s still good to take a look at what happens when interest rates rise and what it means to the average investor.

  1. Mortgage Rates Rise: Those looking to get locked into a lower mortgage rate would look to act quickly. If mortgage rates rise, the housing market could slow down.
  2. Savers May Have an Edge: High interest rates mean savings accounts can earn more, but a consumer would have to pay more for any loan they want to take out, most likely including credit cards.
  3. Your Credit Score Can Become More Important: Working on improving your credit score can help you maximize your buying power. Since you’ll be able to qualify for lower rates, you’ll possibly be able to counteract the rate increase.
  4. Stocks Could Become Volatile: A Fed rate hike could make stocks less attractive to investors. It would also raise interest rates on U.S. bonds, which are considered safer investments.2
  5. More Jobs: A rate hike means that the Fed is confident in the job market, which has seen its lowest unemployment rates in nearly a decade. Raising the interest rates is a good sign that the economy is healthy.

Interested in what interest rates mean to your financial goals and future? Be sure to contact Steel Valley Investment Group of Raymond James at 610.709.9715.


Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices rise.

Five City Center, 740 Hamilton Street, Suite 220    |    Allentown, PA 18101    |    Phone: 484.795.7880    |    TF 833.901.1333    |    F 833.329.0024    |    Map and Directions
Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact our office for information and availability. © Raymond James & Associates, Inc., member New York Stock Exchange / SIPC | Privacy Policy

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Legal Disclosures | Privacy Policy | Terms of Use