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What a Fed rate increase means to Home Buyers

If you watch the news regularly, by now you’ve noticed that stock prices increased overnight this week. This happened after the Federal Reserve (the place banks borrow money from) increased their target interest rate. The target interest rate is the rate the Fed charges banks to borrow money from them. However, this does not directly affect the mortgage interest rates. In fact,  according to mortgage rates are down to 3.87% for a 30 year fixed mortgage, .05 lower than last week. Higher stocks, increased interest rate, and stable mortgage rates means the economy is in good status and the recession is officially over.

This week was the first time the Fed increased the interest rate in over ten years, which means they are confident with the activity in the economy. This past year was great in real estate sales  and probably throughout other industries in 2015. More economists and real estate forecasters are predicting 2016 to be the most stable year in real estate in ten years. If you’ve purchased or sold a home within the last ten years, you may have experienced the unstable market patterns, such as too many houses for sale or too little homes and the absurd amount of distressed properties. The next year and coming years will bring more confidence to the real estate industry.

Although, this was the first interest rate increase in ten years the Feds are planning to gradually increase their rate over the next year. Which means sooner rather than later is  the best time to take advantage of the low mortgage rates.



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