economy

Americans Become Fearful of Rising Interest Rates

Change is happening in 2017. Not only do Americans have a new President, but the economy seems to be evolving beyond the “new normal” of super-low interest rates created in in the wake of the financial crisis.

Think about it: we’ve now gotten used to having 4% mortgages and super cheap car loans. Banks have gotten used to being able to access funds nearly interest-free.

All of this seems to be changing – and a growing number of Americans are getting worried.

According to a recent survey from Bankrate, 49% of Americans say they are concerned about rising interest rates in 2017.

“Fears have grown since last year when 41% of respondents noted their concern regarding increasing rates. The most common reason for worry among respondents was the effect of rising interest rates on the stock market (21%), up from 16% in 2016.”

These are valid concerns, but they need to be put in perspective.

After all, interest rate increases are being driven by a healthier U.S. economy that now enjoys a pre-recession unemployment rate and rising wages.
Also, this rising rate environment should translate into a more favorable climate for savers.

This is not to say all will be peaches and sunshine; higher interest rates could certainly have some negative effects for both investors and consumers.

ProMedica Federal Credit Union is doing everything it can to keep interest rates ultra-competitive. As a not-for-profit financial cooperative, a portion of our profits are returned back to our members in the form of lower rates on loans and higher rates on deposits. What can ProMedica FCU do to assist with your financial health? Call, email, or stop in today!

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Budget

Does sticking to a budget work?

While many Ohio consumers plan to start 2017 off with a household budget/Personal Spending Plan (I like to use the term Personal Spending Plan (PSP) instead of budget. Budget sounds too restrictive and that is not what a PSP is), sticking to that PSP may pose a problem. Data from a consumer survey conducted by the Ohio Credit Union League reveals 75 percent of respondents plan to start the New Year off with a household PSP, but 45 percent of those respondents said they need a lot of improvement when it comes to sticking to a PSP.
Also revealed in this survey was that 70 percent of Ohioans are looking forward to a milestone event in 2017, such as a wedding, the birth of a baby, or a vacation, all of which require months of planning.

Managing money is often a top New Year’s resolution for Americans. In Fact, 34 percent of Americans make money-related resolutions at the beginning of a new year, according to the 2016 Brain Research Institute. Unfortunately, only 46 percent of people who make a resolution maintain it longer than six months and only 8 percent achieve their goals.

With so many missing the mark on their goals, what can consumers do to get on the right financial path this year? Here are the first steps to getting finances in order before creating your PSP.

• Save receipts. It’s hard to know how to start planning if you don’t have a good understanding of how you spend. Save your receipts for a month to track where you’re spending money. Then, add them up and compare your income. After doing this, ask yourself if you’re saving any money and what purchases maybe weren’t necessary.

• Put the bare minimum in checking. Only put a planned amount of money into a checking account for spending each month and put the rest into a savings account. Making money less accessible can help you spend less.

• Get a special savings account. Open a Holiday or Vacation account at ProMedica Federal Credit Union. These types of accounts keep you from scrabbling before last minute events, which can ruin any PSP. The Holiday account only allows a certain number of withdrawals each year to help keep you on track.

• Get a PSP/budgeting app. Download an app to your smartphone or tablet to help with you plan. Many financial apps include planning platforms, monthly account monitoring, and tips for getting out of debt. According to GotToBeMobile.com the best 2017 mobile PSP/budgeting apps include; Mint, PocketGuard, You Need a Budget, GoodBudget, and Mvelopes.

ProMedica Federal Credit Union in partnership with the ProMedica Ebeid Institute and Toledo Community Foundation will also be offering financial seminars throughout the ProMedica footprint including how to Create a Personal Spending and Personal Savings Plan. Please check the events area on our Facebook page for upcoming seminars.

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Cars

New Vehicle Prices Continued to Rise All Year

New vehicle transaction prices rose steadily throughout 2016, reaching a record level in December.
The average paid for a new light vehicle in December was $35,309, according to Kelley Blue Book.

KBB said that new-car prices increased by $521 (up 1.5 percent) from December 2015 to December 2016.

They rose by an alarming $166 (up 0.3 percent) just from November to December.

Tim Fleming, an analyst for Kelley Blue Book, points out that manufacturer incentives have grown to counterbalance the increased prices. In other words, consumers don’t really feel the increases in most cases.

Low interest rates have also contributed to this phenomenon, since lower-interest auto loans also help to shield vehicle price increases from consumers by keeping monthly payments low.

The party has to end at some point, though. There’s a limit to how far vehicle manufacturers can go with incentives and still make money on their products.

Also, rising interest rates will eventually start pushing monthly payments higher.

At some point, consumers will look for more affordable vehicle options.

Look to ProMedica FCU for your auto financing needs. Whether you are looking for a new or used vehicle; ProMedica FCU has some of the lowest rates in the area. Get pre-approved before you shop at the dealer. Utilize our convenient online application process, or stop into one of our 4 locations. We are dedicated exclusively to ProMedica employees, immediate family members, and the affiliates of ProMedica.

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Home Ownership

When the Housing Market Sneezes, the U.S. Economy Catches a Cold

U.S. Housing Worth Hit $29.6 Trillion in 2016

If you want to understand how important the residential housing market is to the well-being of the U.S. economy, consider this: The total value of the U.S. housing stock grew to a record-high $29.6 trillion in 2016, according to online real estate company Zillow.

The national housing market gained $1.6 trillion over the past year, a 5.7 percent increase from 2015.

Los Angeles is the most valuable metro, worth a cumulative $2.5 trillion, while Portland, Ore. had the biggest increase in value among the largest housing markets, growing 13.4 percent in 2016.

These are BIG numbers. They illustrate just why the 2008 financial crisis led to a Great Recession.

The same market that can add trillions of dollars of wealth in a few years can also take it away, in a matter of months.

When the Federal Reserve meets to decide where to go with monetary policy, the housing market must be front and center in their debates.

After all, an upward move in mortgage interest rates can cause house prices to drop, costing the country those trillions in wealth.

On the other hand, a monetary policy that is too loose (low interest rates, easy money) can fuel an asset bubble in housing, creating the dangerous conditions that led to the financial crisis.

The Fed must therefore maintain the right balance. They failed in that mission during the 2000s; let’s hope they’re getting it right in this decade.

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Car Sales

Car Sales Heat Up This December

New vehicle sales are slowing, and that could mean bargains in 2017.

December is shaping up to be the biggest month for new vehicle sales in all of 2016, according to new data from Kelley Blue Book.
The venerable auto valuation source said that December 2016 new vehicle sales should clock in at 17.4 million seasonally adjusted annual rate (SAAR).

This would make December the biggest month for sales all year.

However, new-vehicle sales are expected to be down 2 percent from December 2015.

Kelley Blue Book said it expects further slowdowns in 2017, and its experts’ forecast calls for sales in the range of 16.8 to 17.3 million, which would represent a 1 to 3 percent decrease from this year.

Are you smelling bargains in the air? You should, because if this prediction for slowing sales comes true, dealers will be holding a lot of excess inventory in the early months of 2017.

So, before you buy your next vehicle, be sure you talk to us first. ProMedica FCU has some of the lowest rates in town on new and used cars.

If you have questions about our auto loans, call us at 419-479-4040, or stop by one of our convenient locations. You can also apply online. Just click apply at the top. Get pre-approved before you shop!

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