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March 15, 2017

Federal Reserve Hikes Interest Rates

by Bob Schwartz

Fed Raises Rate Again!

Green Home Improvements - Federal Reserve Hikes Interest RatesToday the Federal Reserve Board announced its first interest rate hike for 2017! today’s interest rate increase is the second one by the Fed in three months!

This interest rate increase was a quarter of 1% and comes after the Federal Reserve Board increased the interest rates in December by a half of 1%.

When the economy is doing good and expanding its typical that the federal reserve will try to check inflation by increasing interest rates.

Obviously when buying real estate  any interest rate increase  pretty much directly applies to all mortgage loans and thereby decreases the amount that prospective borrowers can qualify for as well as increasing their monthly payments.

While interest rate increases are dreaded by the real estate industry banks and retirees look forward to earning more.

With a San Diego average home price around $500,000, any increase in the interest rate can have an immediate cooling effect on the market. Now, with that said, because of the extreme shortage of resale home inventory here in San Diego County, I’m not too concerned about today’s interest rate increase.

Sure, there may be less buyers  in the market, but because of our shortage of supply, I personally don’t see this as making  a dramatic impact, or for that matter, changing the direction  of continued San Diego home appreciation.

Just last week the home 30 year mortgage rate was around 4.21%. A number of mortgage originators are now speculating that with today’s Federal Reserve’s interest rate increase, within the next two weeks the typical 30 year home mortgage rate could increase to approximately 4.5%!

For those of you who would like more detailed information about today’s federal reserve board interest rate hike, this is a link to their press release.

 

 

 

 

 

 

 

 Federal Reserve Hikes Interest Rates

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