As many suspected, the Federal Reserve raised rates on Dec. 16. Below is the original article by Bank of Little Rock Mortgage President and CEO Scott McElmurry.
It’s been nine years since the Federal Reserve (the Fed) last raised interest rates. And since 2008, the benchmark interest rate has hovered at around zero to one-quarter percent. But, come December 16, when the central banking system of the United States meets, that could change.
Job growth, a strong dollar and other economic indicators make it quite likely an increase will take place. But there is no need for panic.
The market has been anticipating this potential rate increase since summer. Financial institutions are preparing for the possible increase, and are adjusting and adapting to it now.
Most experts believe the housing market as a whole will be able to remain strong even with a rate increase. Those historically low mortgage rates should still be in place throughout 2016, and the housing market has made amazing strides to overcome the market crash of 2008. The conventional wisdom is that as an economy gets stronger, rates will start to rise.
So what does this mean for the average home buyer?
Rates may actually drop upon the Fed’s announcement, but that should be followed soon after by rising rates. Even though rates may go up, they shouldn’t skyrocket immediately. We’ll likely see an incremental creep upward. But if you’ve been considering buying a house, now is the time. If you’ve been on the fence about refinancing your current home, now is the time.
While we don’t yet know about any rate increase, we do know the Fed will begin increasing rates in the near future. Waiting much longer probably won’t get you a better rate on a home loan and could limit your options for refinancing.