There are three rate hikes this year that you should be aware of.
The Fed Fund Rate is the interest rate that banks borrow money off of, from each other or from the federal reserve. The easier and cheaper it is for banks to get money, the easier it is for us as consumers it is to get money from banks. Thanks to the many signs of economic improvement that we’ve been seeing recently, people are anticipating a rate hike as early as next week. This will cause credit card and home equity interest rates to rise. Mortgage interest rates, however, are more impacted by bond purchases instead.
Essentially, during a healthy economy, like we’re witnessing now, investors put their funds into stocks rather than bonds which bring interest rates up. But when there are uncertainties about the economy, people will start buying into bonds because they are safer, which brings interest rates down. Unless the economy goes south, you can expect the feds to continue raising rates.
In addition to next week’s interest rate hike, the second and third rate hikes are expected to involve increasing interest rates as well. While the stock market is in constant flux, the trend is still moving upwards which means our interest rates will be rising for a while now too. Thankfully our current 4% range is still relatively low.
If you have any questions regarding rates, mortgages, or the housing market in general, please feel free to reach out to our team at your convenience. We are happy to assist you with all of your real estate related needs.