The New FED Rate and the Mortgages Most Affected

For most home owners the .25 % raise in the FED Funds Target Rate isn’t going to impact them until they decide it’s time to buy a new home because since, in the last few years anyway, fixed rates have been almost as good (if not better than) adjustable rates (or ARM’s.) So if you’re already living in your dream home, have no intention of refinancing any time soon, and you’re in a fixed rate mortgage, you can focus on what this rate hike is going to mean to your credit card interest rates (not the good news) and to investments like money markets and savings accounts (a little bit of good news.)

However, if you’ve been waiting to move or to refinance until you had a better handle on your financial situation, or until you paid down some debt, had just a little more equity in your home, or had more money available for a down payment you may want to call us sooner rather than later. While we aren’t yet seeing a jump in long term fixed rates because, as we mentioned in our previous article, 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, we know that pattern isn’t going to last forever.

Even if you DO happen to be one of those people who are paying on an Adjustable Rate Mortgage (ARM) you may not feel the increase immediately. But an article in Business Insider pretty much confirms what our industry specialists were already forecasting; “The expectation is that the Fed Funds rate will rise to 1.375 percent by the end of 2016, 2.375 at the end of 2017 and 3.25 at the end of 2018.”

That same article closes with this advice; “If you’ve been thinking of refinancing to lock in a lower and/or fixed rate, the opportunity is likely better today than it will be in the future.”

We couldn’t agree more.

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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