What does the US interest rate hike mean for Taiwan?

The China Post
Date: December 16, 2016
By: Christine Chou

TAIPEI, Taiwan — U.S. policymakers have voted unanimously to increase base interest rates by 0.25 percent, to between 0.5 and 0.75 percent. This marks the first rate hike this year and only the second in the past decade. We can expect more rate hikes to come in 2017, as the Fed has hinted it could raise rates at a faster pace next year. Here’s a few tips for people in Taiwan.

More Savings Interest

Savers would be able to pocket a little more interest on their savings account deposits. When the Fed raises short-term rates, banks pay customers higher interest on their deposits. Rates are expected to go up, but it will take a while before savers start seeing a real difference. However, a downside to more money saved up at banks may indicate less people spending money in the local economy.

Mortgage Rates Might Rise

If rates continue to go up, it would impact interest rates for mortgages, car loans and credit cards. Most Taiwanese households devote a substantial portion of their income to pay off monthly installments, so rate hikes are a nightmare to homeowners holding debt — the rate hike decision could mean for them an annual expenditure increase of up to thousands of dollars per year. Homeowners should give serious thought to paying off that mortgage early.    [FULL  STORY]

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