UNAFFORDABLE UTAH

Unaffordable Utah: How to prepare for interest rate hikes

Feb 7, 2022, 10:57 PM | Updated: Jun 13, 2022, 4:01 pm

SALT LAKE CITY – With high inflation sticking around, a series of possible interest rate hikes could help bring higher prices under control but also gradually increase the cost of borrowing money.

“Right now, the market is predicting four rate hikes this year,” said Rich Mebius, Zions Bank’s wealth management portfolio manager.

Mebius said the first rate increase from the Federal Reserve could come in March. The news comes as rising prices are causing concern across Utah, from the grocery store to the state Capitol.

“One of the greatest challenges Utah families are experiencing today is the booming tax of inflation, which just recently hit rates not seen since 1982,” Gov. Spencer Cox said in his recent State of the State address.

“I’m trying to be prepared because I think things are not going to get better for a while,” said Cottonwood Heights resident Cindi Peckham.

In late January, the Federal Open Market Committee indicated that interest rate hikes are on the horizon, but did not provide a timeline.

Federal Reserve plans to raise interest rates as soon as March to cool inflation

“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” said a statement issued Jan. 26.

“The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments,” the statement went on to say.

More than a week after that meeting, the monthly jobs report showed the country added a better-than-expected 467,000 jobs in January, according to the U.S. Bureau of Labor Statistics.

“The economy looks good and we’re moving ahead and that’s the reason why we’re raising rates,” he said.

US economy grew 5.7% in 2021 in rebound from 2020 recession

Mebius said Utah families can prepare now for possible interest hikes.

“As consumers, we’ve become really accustomed to low-interest rate loans,” Mebius said.

First, lock in a low rate for any purchase you’re planning where you will be borrowing money.

“If you’re thinking about making a purchase, you’re probably going to want to do that sooner than later because we know that rates are moving higher.” Mebius said.

That includes your home loan. Utah homeowners could benefit from higher home values and should consider refinancing if they haven’t done so in the last two to three years, Mebius explained.

“Looking at refinancing is going to be really important,” Mebius said.

To save money down the road, also compare auto loans to make sure you have the lowest rate possible, and then tackle that credit card debt or transfer/consolidate balances to obtain a lower rate.

Next, look at your retirement and investment accounts.

“Having a well-diversified portfolio with an appropriate mix of stocks and bonds,” Mebius said.

It’s also a good idea to revisit your household budget and look ahead to other changes that could impact your family’s finances.

“Eventually, student loan payments will come back, so those are some things that consumers are going to have to start making some hard decisions about what’s necessary,” Mebius said.

One silver lining to any future rate hikes: you could earn more interest on your savings account, so shop around for the best rate.

“There’s a lot more uncertainty now, and so being a little bit more prepared is more important than it has been,” Mebius said.

Despite the uncertainty, Mebius reminds that the economy is strong, with Utah leading the pack.

“We don’t want to paint this picture of doom and gloom because there is a lot of good and positive things happening here; we just have to work through a transitionary period,” Mebius said.

KSL 5 TV Live

Top Stories

Unaffordable Utah

...
Ladd Egan

Unaffordable Utah: Keep the holiday magic alive without breaking the bank

From the Thanksgiving turkey to the presents under the tree, the holidays are expected to be more expensive this year.
17 days ago
Housing construction....
Ladd Egan

Unaffordable Utah: Mortgage rates climb again as buyers look for price reductions

Utah's housing market is whiplashing as last year's buying frenzy seems to have slowed down to signs of a recession.
2 months ago
County leaders broke ground Friday to transform two public housing buildings into modern affordable...
Jed Boal, KSL TV

Work begins on 300 affordable housing units for Salt Lake seniors

Salt Lake County made a big move Friday to preserve and improve nearly 300 affordable housing units for seniors.
5 months ago
...
Ladd Egan

Home valuations jump dramatically, but watchdog group expects modest increase in property taxes

Assessors across Utah are finishing up home valuations for upcoming property tax notices, and two counties are already reporting big increases in values.
6 months ago
Utah's hot housing market...
Ladd Egan, KSL TV

Utah housing expert predicts pullback in activity because of mortgage rates

An expert in Utah’s housing market expects that rising mortgage rates will cause a pullback in real estate activity and a slowdown in home price increases.
6 months ago
...
Lauren Steinbrecher

SLC neighborhood townhall questions Affordable Housing Incentives

Thursday night, concerns arose at a community townhall in a Salt Lake City neighborhood over an affordable housing incentives proposal, that some worry is deeply flawed.
6 months ago

Sponsored Articles

house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 reasons you may want to consider apartment life over owning a home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to choose what MBA program is right for you: Take this quiz before you apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Diverse Group of Energetic Professionals Team Meeting in Modern Office: Brainstorming IT Programmer...
Les Olson

Don’t let a ransomware attack get you down | Protect your workplace today with cyber insurance

Business owners and operators should be on guard to protect their workplace. Cyber insurance can protect you from online attacks.
Hand turning a thermostat knob to increase savings by decreasing energy consumption. Composite imag...
Lighting Design

5 Lighting Tips to Save Energy and Money in Your Home

Advances in lighting technology make it easier to use smart features to cut costs. Read for tips to save energy by using different lighting strategies in your home.
Portrait of smiling practitioner with multi-ethnic senior people...
Summit Vista

How retirement communities help with healthy aging

There are many benefits that retirement communities contribute to healthy aging. Learn more about how it can enhance your life, or the life of your loved ones.
Unaffordable Utah: How to prepare for interest rate hikes