Although it was not a surprise, the Federal Reserve (the Feds)
rate hike of 0.25% on Wednesday, December 16, 2015, was still met with a
hushed gasp. How will the rate hike
affect mortgages and real estate sales?
In a nutshell, the rate increase can a good thing. It signals that the economy is on a mend and
the Feds could increase the price of money after its successful quantitative
easing initiatives to boost said economy.
As the economy starts to grow, the
Feds raise rates so that they can control the inflation or deflation that may
occur.
So, what does this mean to a consumer looking for a mortgage
in the future? This is a first of a few
planned increase in interest rates. The
initial increase is not likely to cause a panic in the market. This is likely because the increase was
expected so mortgage industry had some time to digest the notion of an
increase. So, if you are thinking of
buying a home in the next six months, chances are, you can still get “cheap
money”. However, if you are on the fence
about buying home, I would suggest you start looking for a home to take
advantage of the still low mortgage rates.
There are no schedules for the future rate hikes. Rest assured they are imminent.
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