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Interest Rates Predicted to Rise!

Tue, Apr 04, 2017 at 6:30PM

Interest Rates Predicted to Rise!

When buying a new home, purchasers have many factors to consider. One major factor is financing, and according to a recent article by Florida Realtors, mortgage rates may soon be on the rise. That means now may be the time to take the leap and purchase your new home while rates are still low.

There are two reasons for the rate increase predictions. First, the Federal Reserve has announced plans to raise the short-term interest rate in small increments over the next year, with a total of two more increases expected in 2017. Short term interest rate increases can indirectly impact long-term loans such as mortgages, but the second planned move by the Federal Reserve could have an even greater impact.  If the short-term rate increases do not measurably impact economic growth in a negative way, the Federal Reserve will begin phase two of their economic plan. This second phase will involve steps to begin reducing their current portfolio of treasury bonds and mortgage-backed securities purchased during the last recession. This program, often referred to as Quantitative Easing, was intended to pump more money into the economy and reduce bond yield rates, which lowered long term interest rates and also make it easier for consumers to obtain financing.  With many economists predicting continued economic growth in the United States, the Federal Reserve has now turned their attention to preventing inflation. One strategy to accomplish that goal is to begin rolling back measures taken under the Quantitative Easing program. If the Federal Reserve begins to liquidate their portfolio of bonds and securities, this could affect the supply/demand curve, and cause long-term interest rates to rise.

All of these measures and the timing of their roll out will depend on how each phase impacts economic growth. However, if home buyers want to ensure that they obtain financing for their new home at historically low rates, now is a great time to buy!

Call Oceans Luxury Realty at 386-236-3700 or visit our office at 3162 S Atlantic Avenue in Daytona Beach Shores. A member of our expert Oceans Luxury Realty team will help you find the perfect home!

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All listing information is deemed reliable but not guaranteed and should be independently verified through personal inspection by appropriate professionals. Listings displayed on this website may be subject to prior sale or removal from sale; availability of any listing should always be independent verified. Listing information is provided for consumer personal, non-commercial use, solely to identify potential properties for potential purchase; all other use is strictly prohibited and may violate relevant federal and state law. The source of the listing data is as follows: Daytona Beach Area Association of REALTORS (updated 11/30/21 6:53 AM) | Stellar MLS (updated 11/30/21 7:47 AM) |
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