Athen Apaquette

FALSE!

My experience in the last 25 years is that when they raise the prime rate, markets react with a sign of relief, and therefore, at least temporarily, the fixed rates go down. Also it should be noted that when the prime rate goes up, corporations’ debt service becomes more expensive, and overnight borrowing between banks is more expensive, cutting into their profits. If corporate profits are lower, then the stock value could go down, which means if it’s serious enough, there is a flight to quality (which is bonds), which pushes our fixed rates down.

So with all the fears around the prime rate going up, and its finally, finally happening, we have seen a slight decrease in rates, and might in the spring as well, depending on how the corporations report absorbing this higher interest payment and whether they raise it again. Your personal consumer debt is tied to prime rate (like your credit cards, lines of credit, HELOCs) so the prime rate’s going up would impact you on that level.