The Federal Reserve raised their benchmark interest rate 0.25% this week.
So what does this mean for real estate?
Some perspective is in order…
First, mortgage rates are not directly tied to the Fed Funds rate. They are, however, closely tied to the 10-year Treasury.
While the Fed was raising their rates this week, mortgage rates actually dipped lower (although slightly).
Mortgage rates today on a 30-year loan are essentially 4.25%.
The long term average for mortage rates, going all the way back to 1970 is 7.5%
For every 1% rise in rates, there is a corresponding 10% impact to the monthly payment.
Mortgage rates have increased about 0.75% since the election.
Most economists expect rates to increase another 0.5% by year-end.
I am watching mortgage rates closely and will continue to keep my customers updated as to where the experts think they are heading.