Joining us today to discuss updates on area interest rates, we have Matt Wilkerson of @Mortgage. Let’s see how interest rates are looking:
Two weeks ago, the Federal Reserve raised short-term fed funds by another 0.25%. This is the third time they’ve increased rates this year alone, which is working to drive up borrowing costs. At their meeting, they spoke about even more interest rate increases in the future, the soonest being in December with three more by the end of 2019.
Right now, the rate is currently around 2% to 2.25%—the same rate they charge banks to lend out money. This, in turn, drives up mortgage, auto loan, and credit rates. And, with additional increases on the horizon, this rate could potentially increase an entire 1% by 2020. A full-point increase equates to around 10% less purchasing power.
What is driving these rates higher? Interest rates have been at record lows for the last seven years, but as the economy and unemployment rates have continued to improve, the Federal Reserve seeks to normalize interest rates in response.
Because rates are still near historic lows, my advice is to think about buying soon. If you’ve been holding off on purchasing a home, consider that the longer you wait, the more your purchasing power will decrease as 2019 passes by. We’ve even seen sellers put homes for sale before increases hit.
If you are looking to buy or sell a home, have questions about interest rates, or would simply like some information, feel free to contact me for some help. I look forward to hearing from you.