The Federal interest rate sees the largest increase since 1994

JACKSON, TENN (WNBJ)-

Those looking to take out a loan on a car or a home are being met with the largest benchmark interest increase in nearly 30 years.

“The rate that we're talking about today is the federal rate, but that is going to affect everything in from the banking industry to the housing market, even the automobile industry. it's going to be kind of the foundation subset of all of the rates," said Mike Steinbach the new car sales manager at Robinson Toyota.

Yesterday, the central bank announced a rate increase of 0.75%.

It's the first time since 1994 that the fed has raised the rate that much.

The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%.

“Mortgage companies, banks, credit unions, whoever offers mortgages has to react appropriately because the cost for those rate changes and so, you know, as the fed reacts, mortgage companies like us banks that are in town, credit unions have to react the same, you know, accordingly so that they can offer rates, that they can make money off," said Kurt Mullen licensed mortgage originator for Mortgage Investor Group.

Mullen says mortgage rates have been rising over the last several months but that comes after record lows in the interest rates for homes, “At the end of the day, they're historic lows for a reason. they are not expected to stay in that 3% or lower range like we've gotten over several years… the market really is just correcting itself where it had been super low for a long time. and now it's kind of correcting itself back to maybe a median.”

For those looking to buy a car, Mike Steinbach suggests extra research, I would educate young buyers, especially to call your local bank, to call your local dealership and inquire about, you know, what kind of rates can I be expecting in this market… we can kind of navigate those waters to basically educate people on what their monthly payment might be in the life of these.”

Mullen and Steinbach aren’t too concerned about the rise in interest rates,

“In areas like ours. the median house price going up probably affects people being able to buy more than your interest rate going up from, you know, four to five or from five to six, just because that is going to price people out of the market quicker than an interest rate going up," Mullen said.

Steinbach said, “I think the rates are still going to be fairly competitive and good and as great as the markets are right now I still think you're going to see over the next six to 12 months still a strong automobile market.”

Interest rates may increase but Mullen and Steinbach expect the housing and car market to remain healthy.