The Fed finally raised interest rates—should it matter to you as a buyer or seller?

By Virginia K. Smith  | December 17, 2015 - 9:59AM

After months of "will they or won't they" back-and-forth, the Federal Reserve raised short-term interest rates yesterday, as the New York Times reported, nudging them up a modest quarter of a point, to between 0.25 and 0.5 percent. It's the first time in seven years that they've dared raised rates post-recession. But given the small percentage at play here, and the fact that the move has been widely anticipated for some time now, could this affect your day-to-day real estate dealings? Not likely.

"I think it's a non-event," says appraiser and Miller Samuel data guru Jonathan Miller. "If you're a quarter of a point away from being able to qualify for a mortgage, then you probably shouldn't be buying, anyway."

On top of that, mortgage rates have also been edging up slightly in anticipation of the move, meaning there won't be any dramatic spike, says Rolan Shnayder of Citizens Bank. "Mortgage interest rates have already gone up a quarter to three eighths of a point," he says, "[so] I really don't think it's going to affect much of anything, unless they keep raising the rates over the next few sessions."

While both Shnayder and Miller point out that economic conditions likely aren't strong enough to justify immediate further rate increases by the Fed, Julie Teitel, a senior loan officer with Everbank warns that with enough rate hikes over time, the effect on affordability—and the pace of the market in general—will start to feel more tangible. "If [a rate] increase does happen again, buying will dwindle," she says. 

But for now? Expect rates for mortgages and refinancing to be about the same as they have been, and New York buyers to stay as rabid as ever.


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