Just like the weather forecast helps us make travel and clothing decisions, an interest rate forecast can do the same for budgeting choices.
Bankrate.com’s Senior Financial Analyst, Greg McBride gave his outlook for this year.
“2013 will be another good year for borrowers with rates staying low, but it’s going to be a lousy year for savers.”
McBride said for the past four years low interest rates have been the norm for savers.
“This is going to be another year just like that. The Federal Reserve is keeping interest rates low until unemployment gets below 6.5 percent. Suffice it to say we’re not going to get anywhere close to that in 2013,” McBride said.
However, rates will cooperate with you if you’re looking to buy a house.
“We have a slow-growth economy with high unemployment and the federal reserve is actively buying bonds to keep mortgage rates low. the compilation of all of that suggests to me that mortgage rates are going to stay in between 3.5 and 4 percent for much of 2013,” McBride said.
Another positive is that home equity rates are also expected to stay low.
“With home prices having stabilized and starting to show signs of a rebound, lenders are going to be more willing to participate in that market,” McBride said.
2013 also appears good for those wanting to finance a vehicle.
“Auto loan rates are currently at record lows and they are still falling. This is going to be a very good year from a financing perspective for anybody in the market for either a new or used car,” McBride said.
McBride advises if you’re car shopping, check all your options.
“The lowest rates are below three percent on both new and used cars provided that you have good credit and are willing to shop around,” McBride said.
As for credit cards, McBride doesn’t expect much change in the rates but says the environment is conducive to finding lower interest.
“If your credit has improved over the past couple of years you can trade away that card at 15 percent interest and get a rate that’s in the single digits or even one of those zero percent balance transfer offers,” McBride said.
In addition, if you’re working to get out of debt McBride predicts the low rates will provide a tailwind to help with repayment efforts.