IF YOU WERE AN INTEREST RATE, YOU’D BE THIS GUY.
According to the Board of Governors of the Federal Reserve System,
“The Federal Reserve today announced the first interest rate hike of 2017, and the second rate hike in three months.
The Federal Open Market Committee concluded its meeting with the announcement that the Fed will raise interest rates by 25 basis points to 1 percent.” Read more
If you’re unfamiliar with the meaning behind a “basis point,” let me explain:
A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form. In most cases, it refers to changes in interest rates and bond yields.
For example, if the Federal Reserve Board raises interest rates by 25 basis points, it means that rates have risen by 0.25% percentage points. If rates were at 4.25%, and the Fed raised them by 0.25%, or 25 basis points, the new interest rate would be 4.50% – 5.0%.
However, based on this article released earlier today, rates are expected to climb anywhere from 0.25% to 1% in the very near future. YIKES!
WHAT DOES THIS MEAN FOR BUYERS?
If you are considering making a future real estate investment–whether it be your first, second, third, etc.–do not fret, my friends. Time is still on your side, but very much ticking.
Keep in mind rates are still manageable. However, even the slightest increase in rates can bump you out of an affordability bracket where you may have once qualified.
And trust me. I get it. You feel overwhelmed with your current monthly expenses –student loans, groceries, utilities, health insurance, auto insurance, daycare for the kiddos, landlord bumped up your rent.
First, take a deep breath. Then, take one more.
Remain positive and take this time to digest what’s up ahead, yet not here quite yet. Perhaps we need to sit down and determine where you’re at, where you’d like to be, and if the numbers pencil out to get you to your destination sooner than you imagined.
WHAT DOES THIS MEAN FOR SELLERS?
If you’re currently a homeowner thinking about selling so you may move into your downsized or upgraded home of choice, you may want to seriously consider getting on it sooner than later. Since the start of 2017, inventory has hit an all-time low while buyers are eagerly awaiting for more homes to hit market. Not only will you likely see multiple offers roll in (if priced accurately, of course), but you may even experience accepting an offer from a well-qualified buying who is willing to pay over asking. Meanwhile, this will allow for you to arrange your next wise real estate investment while rates are still manageable, yet climbing as our economy strengthens.
Remember, whether you are a seller, buyer, or both, I’m always here and happy to help get you where you need to be. Chin up!
Over and out,