It’s official. After months of will-they-or-won’t-they, the Federal Reserve finally raised interest rates in December for the second time in nearly a decade. Mortgage interest rates quickly followed the Fed Funds Rate, settling above 4%.
Understandably, the reality of rising mortgage rates has created some buzz in the housing market. But it shouldn’t deter prospective buyers from purchasing a home. Here’s why:
- 4% Is A Steal – Even in the 4% to 5% range, mortgage rates are low by historic standards. Throughout the 1990s rates were in the 7% to 8% range, and in the 1970s and ’80s they were double digits.
- Buying Still Beats Renting – With borrowing costs cheap, home-buying remains more affordable than renting in many parts of the country, including Chicago, where rents are hovering at all-time highs.
- Rising Rates Spur Buying Activity – Fence-sitting buyers have more incentive to purchase a home now than they did when rates were pegged at the bottom. With a little more urgency in the marketplace, it’s an opportune time for sellers to make a move as well.
- Economy Is Improving – The basis for the rate hike is good news. It indicates our economy is strengthening and the Fed has an overall positive outlook.
- Housing Outlook Is Positive – With the economy expanding and more activity anticipated in the marketplace, most industry experts believe housing will continue to grow in 2017.
If you’re thinking about buying or selling, or just looking for more information about your local market, contact your @properties broker.