The Federal Reserve met this week and did not change interest rates. This was their first meeting in 2017 and the vote was unanimous to keep rates at the current level. The economy is improving but the group is uncertain about the future. Right now they are watching the economy and what happens with inflation and employment. They are reinvesting in mortgage backed bonds to keep interest rates low.
The job market is improving with strong job gains in December. There is concern that the job growth may increase inflation to a level higher than the Fed is comfortable with. Wages are increasing. The Fed's job is to balance the rate of inflation and job growth. At this point, inflation is about 1.5%, the Fed wants to see it at or under 2%. The Fed will continue to watch this and slowly increase rates as needed. At this point, most investors expect another rate increase in June of this year.
As interest rates increase, it can actually help homebuyers. Yes, the higher rates may affect what you can qualify for, but it also means the economy is improving. This means your investments should be doing better, there should be more consumer spending which leads to more jobs. It also can get homebuyers off the fence. We usually see potential buyers move faster when rates are increasing as they want to get the lowest possible interest rate. When rates are steady or decreasing, buyers may want to wait to see if rates drop more so they can get a better deal. This means it can be a great time to sell your home.
With more people working, there is more spending and more competition for homes – this tends to push home prices up over time. This means now is the time if you are considering a home purchase. We never know what the future holds, we just know where things are at today – but the signs are leaning towards higher prices and higher interest rates. Now could be the best time for you to purchase a new home!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website
