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No Need to Panic About Rising Interest Rates
Interest rates may be on the rise, but hey….don’t worry, this is why….
After seven years of some of the lowest interest rates in recorded history, the Federal Reserve has decided to raise the key Federal Funds Rate by 0.25 percent. This long anticipated move is causing concern amongst consumers that it will lead to a jump in mortgage rates and negatively impact the U.S. housing market.
The real question that everyone is asking is this: do people need to worry about interest rates leaping? Answer: While rates are predicted to rise somewhat, rates are not expected to increase drastically. This response by experts is largely due to the fact that mortgage rates don’t rely solely on the “lock-step” with the Federal Funds Rate. Although the Federal Funds Rates is the determiner for the greater economic environment, there have been times in history when these two rates have moved in opposite directions. Other factors to consider when analyzing interest rates include the overall health of the US economy, unemployment rate, job creation, rate of inflation and of course global environment.
In addition to interest rates, people are also concerned with revolving credit. Yes, credit cards and home equity loans are tied to the Federal Funds Rate. Non-revolving loans, such as mortgages, are not directly impacted by this factor alone. With this said, interest rates are not expected to spike above 4 percent, however they will fluctuate with the economic growth. Mortgage rates have already moved higher in anticipation of an increase in the Federal Funds Rate.
It is worth noting that it is not realistic to expect interest rates to stay at their current historically low levels forever. If you are considering a home purchase, learning about your financing situation and options should be your first step. Understanding your loan options and your comfortable price range is critical to preparing to be a successful buyer.
When looking for your next home purchase in San Diego, or to sell your home in San Diego, contact Jenn Blake Real Estate Group.
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DRE# 01494271
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Compass is a real estate broker licensed by the State of California and abides by Equal Housing Opportunity laws. License Number 01527365. All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate.
