Personal loan and mortgage rates fall as most other interest rates rise
It is almost certain that the Federal Reserve meeting this week will end with another significant hike in a key rate. Meanwhile, rates for personal loans and mortgages – loans used by consumers – are falling.
Consumers with good credit scores have received lower rates over the past seven days on three- and five-year personal loans, according to financial website Credible.com. For example, consumers with a credit score of 720 or higher got a rate of 10.71% on a three-year personal loan, down from 11.01% the previous week. Those applying for a five-year loan got an average rate of 13.59%, down from 13.81% the previous week.
Personal loans have become popular alternatives to credit cards due to their low interest rates. The typical credit card carries an interest rate of around 20%, even for people with good credit scores.
Banks’ lending costs increase every time the Fed raises its federal funds rate. These costs are often passed on to borrowers, including those with a credit card balance.
Mortgage rates have also fallen.
Mortgage rates are also on a downward trend. According to Forbes, the average 30-year fixed-rate mortgage rate started this week at 5.73%, up from 5.88% the previous week. Mortgage rates are not influenced directly by the action of the Fed but by the yield of 10-year US Treasury bonds. This rate, which has climbed in recent months and almost doubled mortgage rates, fell last week.
Consumers looking for a personal loan or mortgage should shop around carefully among lenders to get the best terms. Fortunately, ConsumerAffairs researchers have done a lot of work to help you make your decision.
The right personal lender can vary depending on your credit score and the amount you need to borrow. ConsumerAffairs reviewed 24 lending companies with annual percentage rates (APRs) below 36% to help you choose. Check out our guide, with thousands of verified consumer reviews, here.
We’ve also put together a comprehensive guide to choosing a mortgage lender. The ConsumerAffairs research team looked at 66 mortgage companies that were reviewed by more than 5,478 people over the past year. To find the best lender for you, read our guide to comparing loan types, eligibility, rates, and terms here.