The Federal Reserve has recently stepped in buying dollars by the millions to try and stop the decline. But, if the Dollar continues its slide, higher interest rates are inevitable. Here are some reasons why:
1) Supply and demand. Instead of investing money in the United States, funds will go to
other countries. Less money ( supply ) for people to borrow, will result in higher interest
2) Inflation. Anything that is imported into the United States ( like oil and automobiles) will take more Dollars to buy. Higher inflation = higher interest rates.
What can you do?
1) Choose a float-down option when locking in an interest rate. If the interest rates continue to rise, you are protected. Should the markets turn around and rates fall, you can re-lock to the lower interest rate.
2) Choose an extended rate lock. Interest rates can be locked for 90 days, 180 days or other periods of time.
3) If you feel the Dollar is going to continue it's slide, purchase another countries currency that you feel will rise against the Dollar. For instance, you could put money into a foreign currency mutual fund that concentrates on the Yen.
In any event, it doesn't hurt to be paying attention. Feel free to click with any questions or concerns.