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After following a relatively stable downward trend for most of the year, Inflation rose again in Octoberaccording to a release Thursday from the Bureau of Labor Statistics. It now stands at 2.6%, an increase of two-tenths of a percentage point from 2.4% in September.
Perhaps more importantly, it means that the Federal Reserve Cut the federal funds rate by 50 basis points before another was published in September and November. This means that inflation may be a little more rigid than initially expected. Alternatively, the Fed's path toward its 2% target could be temporarily disrupted. Only time will tell.
Against this background, the borrower home equity loan You may hesitate to take action. After all, a steady rise in inflation could cause interest rates to rise again, making this unique product more expensive than it is now. Understanding this dynamic can help you understand whether it's worth taking out a mortgage as inflation rises again. Below we explain why this is still the case.
Lock in a low interest rate before mortgage rates go up here today.
With inflation rising again, should you take out a home equity loan?
I don't know if now is still a good time to get a mortgage. Here are three reasons why it might be worth pursuing, even after the recent rise in inflation.
Interest rate cuts still expected
While many borrowers may be used to interest rates rising as inflation rises, that may not be the case this time. For now, a rate cut is still expected at the last Fed meeting in 2024 in December. CME Group's FedWatch tool currently predicts that probability to be 75%. That would lower the federal funds rate to 4.25% to 4.50% from the current range of 4.50% to 4.75%.
While this isn't a huge reduction, it's still better than an increase, and home equity loans will be even cheaper than they are now. However, this forecast may change depending on additional economic indicators released in the future. So if you're considering a home equity loan now, it makes sense to be proactive.
Check out the interest rates you can qualify for for a home loan online today.
Financial needs can't wait
If you're one of the millions of Americans feeling the financial burden of inflation and rising interest rates, you may not be able to postpone your financial needs any longer, even with the prospect of lower interest rates. yeah. and, Average housing equity It's hovering around $330,000, so you likely have plenty of capital to tap into right now. So consider taking action now to improve your financial health.
Home equity loans are still cheaper than other loans
of The average interest rate on home equity loans is 8.41%. As of November 14th. this is, credit card (currently averaging about 23%), which is about 5 percentage points cheaper than personal loans (currently averaging about 13%). Therefore, home equity loans are still significantly cheaper when compared to the alternatives.
However, part of the reason these products are cheap has to do with the way they are borrowed, particularly the fact that they are collateralized by the home in question. Therefore, it is important that the borrower is able to repay the full amount withdrawn or they may risk losing their home to the lender in the process.
conclusion
Rising inflation isn't good for borrowers, but it doesn't mean your options are limited either. Home equity loans, in particular, can still be valuable for a variety of reasons. But waiting to act could be problematic if the latest inflation report turns out to be a sign of looming new economic problems. Understanding this possibility, prospective borrowers may benefit from considering home equity loan options now while interest rates are still relatively stable.
Start shopping for home equity loans online today.
