On Wednesday, Dec 14th the Federal Reserve Board announced that it would raise interest rates. The Federal Open Market Committee voted for a .25-percentage point increase, which raises the federal funds interest rate to .75%.
Below are some key points on federal rate hikes this will affect the real estate market:
Thirty-year fixed mortgage rates rose more than half a point (.50%) in the four weeks following Donald Trump’s election victory. Rates now sit solidly over 4% for this first time this year. According to USA Today, considering a $300,000, 30-year fixed rate mortgage, each half a point increase adds close to $100 per month to your payment.
According to USA Today, additional federal rate hikes are expected next year and mortgage rates could have as much as another half a point to go up, meaning that the home loan interest rate would be just under 5% at the end of 2017.
What if you are currently shopping for a home?
We are still in a period of historically low mortgage rates compared to the historical average of 8%. Therefore, even a 4-5% home loan is great compared to the 44-year historical average of 8%.
If you are considering buying a home, this might be the perfect time. I would be pleased to assist you in the real estate process; whether you are buying or selling. Please contact me here.
To learn more about how the fed rate hike will affect everything from your savings account to the interest rate on your credit cards, please visit: USA Today | Fed Rate Hike: 7 Questions (and Answers)