How will the Fed rate increase impact the housing market?
Earlier this week, the Federal Reserve raised its interest rate by .25%. An increase to the Fed's key short-term rate usually causes consumer interest rates to rise, but the impact depends on the type of debt. Mortgage rates aren’t as closely aligned with the Fed’s key short-term rate and tend to be influenced by other factors, such as inflation and mortgage-backed securities.
Can you take advantage of today's mortgage rates?
Some analysts who are closely monitoring mortgage rates predict they will continue to increase in 2019. Even though mortgage rates have been on the rise, home ownership still represents a good economic strategy, and refinance transactions continue to make sense to many consumers looking to:
- Eliminate mortgage insurance payments after achieving 20% equity
- Consolidate debt*
- Reduce their mortgage term to 15, 20 or 25 years
- Switch to a lower rate
- Remodel their home
- Convert an Adjustable Rate Mortgage (ARM) to a fixed rate
- Payoff a home equity line of credit (HELOC) that's in the repayment period
To learn more about the Fed's key short-term rate, check out this article published by the Federal Reserve that reviews how monetary policy influences inflation and employment.
If you have questions about your mortgage options, we are here to help. Feel free to contact us for more information.
*Debt consolidation does not pay off the debt, please consult a financial advisor regarding the effect of consolidating short-term debt into long-term debt. This material is informational only and not an advertisement to extend credit as defined by TILA/Regulation Z nor an application for credit as defined by RESPA/Regulation X. All applications are subject to underwriting approval and determining applicant’s ability to repay. Not all applicants are eligible for or qualify for all loan products offered. All loan programs, terms and conditions are subject to change without notice. Rates and terms are valid as of the date of printing/distribution.