The Federal Reserve's announcement of a rate increase last Wednesday has big implications for prospective home buyers and sellers, but experts have four words for anyone who's feeling that they need to act immediately: Don't do anything rash!
When the Fed's rate goes up, so do interest rates of all kinds of other consumer loans, including mortgages. Because mortgages are longer term than many other loans, even a small increase in interest rates can mean a buyer will pay many thousands of dollars more over the life of the loan. But moving quickly to try and lock in the lowest rate may not make sense, depending on your overall financial picture.
According to NBCNews.com’s recent article, quoting Plancorp’s Peter Lazaroff, "Homeowners should not accelerate or decelerate their purchase decisions based on a market forecast," said Plancorp’s Peter Lazaroff. "All markets, including interest rates, are forward looking. That means that debt prices have already built in expectations for slightly tighter monetary policy."
Peter said further increases are likely to be gradual, meaning that prospective buyers and sellers have some time before higher rates really begin to bite.
To gain additional insight from Peter, read his recent quotes on the federal interest rate increase here:
NBCNews.com article here.
BankRate.com article here.
ThinkAdvisor.com article here.