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 the process accomplished and a plan for how you are going to achieve them. Do not be discouraged during the process, it is an exciting time!
If you have any questions about mortgages, or would just like to talk to someone about the changes going on with the interest rates, First Ohio can help! Feel free to contact us here, we look forward to hearing from you!