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One of the goals of the Federal Reserve is to keep inflation in check. Their main tool for doing so is to raise or lower interest rates. In the last year, the Fed has raised interest rates nearly a dozen times in a row and has given no indication that they will put on the brakes any time soon. In fact, many economists believe that short-term rates will continue to rise, probably until the Fed takes rates up another 1/2 to 3/4 point. "The Fed will keep battling inflation by raising interest rates, despite high oil and gas prices. The best thing homeowners can do is to act defensively," says Bob Walters, Chief Economist for Loans. "While short-term rates are on the rise, long-term rates remain near historic lows. Anyone who currently has an adjustable rate mortgage (ARM) and who will be in their home for more than 3 years should strongly consider refinancing to a fixed-rate mortgage." The Fed meets again on November 1st and it's expected that they'll raise rates another 1/4 point. If you have an ARM that is set to adjust, now may be the time to lock in your rate for the long term.
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