Interest rates are going up, what does this mean for home buyers?
The Federal Reserve raised interest rates last Wednesday for the first time in nearly a decade, meaning that the U.S. economy has overcome the wounds of the 2007-2009 financial downfalls. The U.S central bank’s policy-setting committee raised its benchmark interest rate from a range of 0-0.25 percent to a range of 0.25-0.50 percent, ending a lengthy debate about whether the economy could withstand higher borrowing costs.
It is still unsure what the long-term effects of this change will be but for now we can speculate on what this will mean for home buyers:
- The feds have been signaling that interest rates will be raising very slowly, which will probably have very little effect on mortgages and saving accounts.
- Mortgage lenders have already been working the increase into today’s mortgage rates because an increase has been approaching for some time.
- Real estate agents and home builders do not feel there is a sense of urgency for home buyers to purchase before the rates go up, buyers should take the time needed to make good decisions.
- With that said, if buying a home is on the horizon, it does not hurt to pay attention to these changes.
In the United States right now the average mortgage interest rate is 3.95%. Most experts do not think mortgages rates will go much higher than 4% anytime soon. Even an increase to 4.5% would only add about $700 a year to the monthly payments for a $200,000 home. The early indications are that rates barely budged after the announcement by the Federal Reserve last week.
Buying a home can seem like an overwhelming process but do not let this recent news about interest rates scare you away. Have a personal timeline for when you want to have certain steps in […]
