Your Money Matters More: Interest rates

SIOUX FALLS, S.D. (KELO) – It’s been one week since the Federal Reserve increased its benchmark interest rate for the first time in three years. The goal of that increase is to slow down spending and help control inflation.

In this week’s Your Money Matters More, we’re sitting down with a commercial real estate broker in Sioux Falls to better understand interest rates and how they impact real estate.

Nick Gustafson, the executive vice president at Bender Commercial, says the Fed raising interest rates has a trickle-down effect on the bond market response as well as individual lending institutions.

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“I think the simplest kind of way to help people understand what interest rate environment can affect them — if you bought a $350,000 home in 2020, your principal in interest rate was probably around $1,400,” Gustafson said. “If you bought that same today, your principal in interest pay, your monthly payment, would be around $2,300. It’s about a 62% increase. Same house, same neighborhood, but it’s a 62% increase in your monthly mortgage payment.”

Aside from mortgages, Gustafson says many of the companies that provide everyday goods and services to us use debt to finance daily operations and infrastructure.

“Any time that interest rate goes up, people end up paying more at the grocery store, at the pump, all over the place,” Gustafson said.

You can watch our full conversation with Gustafson in this week’s Your Money Matters More. It airs Thursday at 6:30 pm and Saturday at 8:30 am Central Time on KELOLAND Plus.

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