The FED is “Raising the Rate” – What That Really Means for You

They’ve been talking about it for a long time, and we’ve been monitoring every statement the FED has made about raising “the rate.” On December 16th they finally did it. The announcement came Wednesday that they are moving the FED Funds Target Rate up for .25% in reaction to jobs growth and several other key pieces of economic data. This is actually the first increase since 2006, but what does this mean for home buyers or folks considering a refinance?

From a big picture perspective, it means that the people whose job it is to track economic growth believe our future is looking brighter. It also means you’ll see a little higher return on investments like money markets and savings accounts.

And, interestingly enough, we’ve seen the average 30 year fixed rates fall slightly since the FED announcement. Keep in mind that the FED’s move is largely tied to short term rates, while mortgage rates are more directly tied to the longer term 10 Year Treasury which has maintained solid yields.

While we will certainly see some gradual increase moving forward as the FED inches the target rates up right now there is no hint of “impending doom” or 10% mortgage rates.

Bottom line — Yes, we expect gradual increases to interest rates, but for now conditions are still right to buy or refinance your dream home!


We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

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