Interest rates are up and rising. Here’s what Tampa Bay banks see coming.

News that the Federal Reserve was raising interest rates by a quarter of a point didn’t come as a big surprise to Tampa Bay bankers — the move was widely expected as a measure to cool down persistent inflation.

The Fed isn’t done, either, indicating that rates are likely to rise a few more times before year’s end, pushing the prime rate over 5 percent or even 6 percent.

The question now is: How much higher will interest rates get before local customers scale back their borrowing?

It might be higher than you’d think.

“At one point there was a lot of talk about the Fed raising it half a point instead of a quarter point,” said David Mastrorio, executive vice president and chief lending officer at First Citrus Bank in Tampa. “So the market at one point basically factored in that that was going to happen, and it didn’t happen — it was actually less. So I don’t think just one rate increase or maybe even a couple of rate increases will have that significant of an impact.”

The Fed’s increase pushed the prime interest rate, or the best rate borrowers typically get from their lenders, from 3.25 to 3.5 percent. By the end of the year, that could surpass 5 percent.

But for the time being, rates are still relatively appealing. And clients inside and outside Tampa Bay haven’t stopped borrowing.

“Rates are still good,” said Tom Zernick, president of First Home Bank in St. Petersburg. “We’ve been in such a low-rate environment that some of the normalization of rates that we’ll see over the course of the year is much better than rates have been historically over the years.”

Michael Hartman, senior vice president of lending at Suncoast Credit Union, said he’s seen a slight dip in mortgage activity since the start of the year. But at the same time, members have been actively refinancing their mortgages or pursuing home equity loans in order to create some cash flow.

“Because of the value of homes increasing as they have over the last year or so, people are accessing that equity through home equity loans,” he said. “We have seen an increase in that market.”

For new home purchasers, members are still trying to lock in 30-year fixed-rate mortgages while rates are still relatively low. But as the prime rate creeps up to 4.5 percent or 5 percent, Hartman said more people will take a longer look at adjustable-rate loans.

“That’s always been the historical pattern, so we would probably expect that to continue,” he said.

On the business side, borrowing remains strong, even after banks processed hundreds of billions of dollars of forgivable Paycheck Protection Program relief loans from the U.S. Small Business Administration.

First Home Bank does a lot of business through the agency, which offers floating loans to businesses that may have trouble securing loans from other lenders. While those loans are variable, not fixed, they typically require lower down payments and longer repayment terms, which makes them appealing even in times of rising rates.

“In my history of SBA lending, which spans three decades, I’ve worked in environments when prime (interest rate) has been 6 percent, 7 percent, and you know what, businesses still need capital,” Zernick said. “As long as it’s properly structured ... folks still borrow and grow and expand.”

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Rather than circling their financial wagons, some businesses are looking to invest in real estate and infrastructure, Mastrorio said, so they’re ready to hit the ground running when headwinds like workforce retention, supply-chain slowdowns and inflated prices ease up.

“Most of our clients are telling us that the demand is there,” Mastrorio said. “A lot of what we’re looking at is businesses expanding — a lot of loans to acquire new property or to build a new facility to continue to allow for the expansion of their business. That’s a lot of what we’ve been seeing over the last 12 to 18 months or so.”

Zernick said now is the time for home and business owners alike to review their debt schedules across the board, from credit card bills to car or business loans. If any of it is tied to the Fed’s prime rate, “they should be seeing if they can consolidate and refinance into a lower-rate product, and help out their cash flow during these inflationary times,” he said.

“It’s a nice time to give your business a financial physical, and give yourself one,” Zernick said.

If you can do it before rates rise again, all the better.

“The rates obviously are historically very low regardless of where they are today versus six months or months12 ago, or even six or 12 months from now,” Mastrorio said. “But they’re definitely trending up. So if my plans are to do something, the sooner I do it, the lower a rate I would more likely get.”