What Does Interest Rate Hikes Mean, Really?

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The Feds raised interested rates .25% on Wednesday. The first rate increase in 9 years!

So, what does interest rate hikes mean? And how will this one affect your home buying power in 2016?

What does Interest rate hike meanLike some of you, I was very interested in seeing what the interest rate hike would do to the real estate market in our area and more importantly, what baring would it have…if any, on your ability to buy a house.

Talking with my lender, I was quickly and quietly assured this rate hike would not be that Earth shattering! In fact, most of the markets responded quite favorably to the news.

This latest news got me thinking, “If interest rates go up and down all the time, what does an interest rate hike by the feds mean?”

My lender told me folks looking to make big purchases like cars and homes don’t need to necessarily run out tomorrow and make their purchase. But, it’s a clear ‘wake up call’ to be prepared for their pending purchase.

In particular, home buyers want to be diligent in know exactly what their interest rate will be for their loan and how this recent hike will make a difference in what they can afford should they wait until late Winter or early Spring to buy. He said, “Talk to a lender now…even if you do not (or can not) plan to buy for another 3 months.” It’s never too early to get your finances in order! He also told me it’s those buyers who are well aware and educated in the process that ultimately have the strongest buying power! Made sense to me!

The folks who will see the affects of the interest rate hike are credit card holders and those folks with IRA’s just to name a few.

So, What Does Interest Rate Hikes Mean?

Well, in this case, it appears to mean the economy is moving in the right direction and the Feds are confident enough that a .25% interest rate hike can only help and strengthen said economy. Reports that the Feds main interests where to encourage investment and job creation, and to control inflation with this hike seems to indicate their intent.

In my humble point of view, I’m only interested in how this impacts my clients and their overall happiness. Selfishly, I want things to stay on the same tract it’s been on and see my buyers and sellers continue to achieve their real estate goals. If this recent action by the Feds does nothing to alter how my folks reach their dreams of home ownership in 2016…then I’m AOK!


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate


 

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