Last week, the Federal Reserve increased the discount rate by a quarter percent and panic ensued that this would hurt the housing industry. The next day, mortgage rates improved! How can that be?
The Federal Reserve has been slowly raising short term rates for a year. Although mortgage rates have increased during that time, it has been an orderly increase and not hurt the housing market. The Fed is expected to increase rates two more times this year, but those increases have already been absorbed and mortgage rates are not expected to rise further. The good news is that mortgage rates are around 4.5% for a 30 year fixed rate loan. Other investments like CDs and Savings accounts will start paying higher interest rates that will help millions on fixed incomes and most retirees. The market is hot, call us to talk about your next move!