Fed raises interest rates this week………..

Most of us knew this was coming but it's finally official.  The Federal Reserve met this week and announced that they were raising the Federal Funds Rate to .25%.  This move has been widely anticipated so there shouldn't be much change to the mortgage rates.  Investors had priced in a .25% increase over the past few days.  If the Fed had elected to wait or to increase it by more, we would have seen an immediate rate change.  This was the first rate increase in almost 10 years. 

What does this mean?  The Fed announced that they are watching the economy and they expect to keep rates low for at least the next two quarters.  They feel the economy has expanded at a moderate pace over the past six weeks and housing has also improved.  The pace of job gains has also helped in the labor market.  So now we watch to see what investors do with this news and if rates will bounce up a bit more or if this was enough for now.  With the holidays coming, it doesn't take much in the market to see rates swing as there aren't as many investors in their offices.  The December employment report will sway rates when it comes out in the beginning of January.

Additional rate hikes are likely in 2016, it will depend on how the economy reacts.  Right now the Fed believes the job market is improving and business investment is growing.  They will use the Federal Funds rate to control inflation and help the economy move at a good pace.

So for those thinking about buying a home, rates are good now, expect that we will see rates increase in 2016 – but not at a huge rate.  This is a great time to buy – home prices are good and so are rates.  The longer you wait, the less buying power you may have.

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

Related Posts

Weekly real estate market update 4/12/24… new listings up, new houses are getting smaller

🖨 Print Article New listings hit their highest point in eight months, heading in the right direction. Showing activity bounced up again following the dip caused by the snow storm…...

Defining Mid-Century Modern Style

🖨 Print Article I am a long-time lover of the mid-century modern style, and curate a list of mid-century/modern homes listed for sale in the MLS each week as part...

Subscribe to Our Newsletter for Market Updates & Mid-Century Modern Listings

Our weekly HomesMSP Update includes current local market information and a curated list of mid-century modern properties for sale, plus posts from an inspector, a lender, a stager, info about neighborhoods, life in the Twin Cities… even recipes!

Hidden

Blog Categories

Archives

Sharon and John Hensrud

About Us

The HomesMSP Team is committed to meeting you where you are and listening… really listening to understand you so we can use our extensive knowledge of the market and local neighborhoods to give you personalized service.