The Federal Reserve just raised interest rates by another quarter point.
That not only marks the 11th rate hike the central bankers have inflicted on us in just the last 18 months...
It also brings interest rates to their highest point in over 22 years!
Inflation untamed
Raising interest rates is supposed to curb the recent bout of red-hot inflation that started plaguing our economy in 2021.
Unfortunately, it's not clear that the 11 interest rate hikes we've already suffered through will be enough to do the job.
During a news conference announcing this latest increase, Federal Reserve Chairman, Jerome Powell signaled his belief that the battle against runaway inflation still "has a long way to go."
“I would say it’s certainly possible that we will raise funds again at the September meeting,” Powell went on to warn.
Interest rates & solar
Rising interest rates affect all businesses, of course. But the solar industry is especially sensitive.
That's because—like most other major purchases—homeowners who decide to go solar generally prefer not to pay outright in cash.
Instead, the vast majority choose to finance their solar system with a loan from a bank or some other type of financial institution.
The federal government's Solar Investment Tax Credit (ITC)—which lets you deduct 30% of the full cost of going solar from your income tax—even makes it possible to get a solar loan with no money down.
Lenders are frequently willing to count that future 30% tax credit as a downpayment in advance... so long as your credit is good and you agree to turn the full amount over to them come tax time, of course.
Since sunlight is free, however, once your solar system is up and running all the energy it generates will be free as well—making those monthly loan payments the only expense incurred.
That means that—as long as the monthly payments on your solar loan work out to be less than your average electric bill—transitioning to solar will translate into immediate monthly savings.
But, of course, as interest rates continue to rise, the monthly payment for the very same loan will do the same.
Even a small rate hike of just a quarter of a percent will substantially reduce the amount of money many homeowners can save by going solar. For some, it may foreclose the possibility of realizing any savings entirely.
That's why the recent spate of interest rate hikes is so important to anyone thinking about transitioning to clean and renewable solar energy.
If you’re interested in lowering your monthly power bill by transitioning to clean and renewable solar energy, the best time to act is now.