Hearing begins for the Secretary of the Treasury pick

Steven Mnuchin United States Secretary of the Treasury

Steven Mnuchin (Source: Wikipedia)

Confirmation hearings for President-Elect Donald Trump’s nominee for Treasury Secretary, Mr. Steven Mnuchin – former Goldman Sachs partner, will be fairly animated today as he interviews in front of Congress.

He’s going to be questioned about his foreclosures, which is a normal servicing process from the financial institutions that he has served in over the past years.

For the average consumer, his stance on the dollar, his stance on China, his stance on interest rates are being watched very closely.

Prime rates may increase

If the Fed raises the prime rate, or the federal funds rate, which is the rate that banks charge each other to borrow money, it will have an impact on consumer loans.

Currently, the prime rate in the United States is 3.75%. If the Fed raises the prime rate another quarter, to 4%, it will impact consumers at all phases of borrowing.

For home equity loans, interest will go up that are tied to prime. Automobile loans will increase. It is a very interesting time to watch.

Janet Yellen, the current Federal Reserve Chairman, has seen the need to increase interest rates over the last 12 months. This follows a seven- to eight-year period of interest rate cuts and declines.

What does it mean for mortgage rates?

Mortgage rates for the average consumer will be up probably a half percent. If mortgage rates were 3.5% in the summer of 2016, expect to see 4% for a 30-year fixed rate home loan.