Feds Raise Rates for First Time in 7 Years - So What Does it Matter?
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For years, we, as real estate professionals, have been telling buyers and sellers that rates will increase, and after awhile it begins to seem like we've been crying wolf.
For the first time in 7 years the Federal Reserve increased the federal funds rate by 0.25% today. This means that my youngest son was an infant last time there was an increase.
As result of the increase, the Dow Jones is up 70 points.
This increase in the rate comes as a result of the Feds belief that "economic activity has been expanding at a moderate pace." This along with a decline in unemployment and other factors lead the Fed to the belief that now is the time for this rate hike.
What does this mean to buyers and sellers, or why should you care?
Perhaps it does not matter too much in the short term as it appears that lenders already increased their rates in anticipation of this increase. Further, 30 years loans are generally based upon 10 year Treasury note yields. Though it too rises as other rates do, it doesn't rise as steeply.
If the Federal Reserve continues to increase rates, it will likely cause an eventual increase in mortgage rates as well. If that happens, history tells us that housing prices will not increase as rapidly and might even fall as buyers cannot buy as much house as they could at lower rates.
For the full article, please see Feds Raise Rates for the First Time in 7 Years.
If you want to sit down and talk about what is right for you and whether or not it is the right time for you to sell or buy and Orange County home, please call me at 714-319-9751, to schedule a free consultation.
Originally posted at: Feds Raise Rates for First Time in 7 Years
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