Don't Panic Over Rising Interest Rates!

Posted on Wednesday, December 16th, 2015 at 3:40pm.

Don't Panic Over Rising Interest Rates

The Federal Reserve recently announced their intention to raise the federal funds rate by a quarter point. This increase will effect a wide range of consumer loans, including mortgage rates. This announcement is enough to send buyers into a panic. However, it’s important to examine the facts before rushing into a home purchase.

The federal funds rate increase will most closely impact short term loans, like those for credit cards. Long term loans like mortgage rates are not directly affected by the increased rates. However, that’s not to say that mortgage rates won’t be affected at all. Interest rates for mortgage loans are expected to increase slowly over time as a result of the federal funds increases. Rates have already risen slightly in the last few days. Interest rates have varying effects on mortgage loans and the real estate market in general. For example, rising interest rates can effect how much home a buyer can afford. Home prices may also decrease as a result of increased rates. You can read more about the effects of the federal funds rate increase on NBC News.

It is impossible to predict exactly how increased rates will effect home buyers and mortgage loans. Whether you’re planning to buy a home soon or wait a little longer, don’t let the panic of rising interest rates force you to change your plans. If you’re considering a home purchase and are concerned about financing, the best advice we can give is to speak to a professional lender. A local lender will be able to provide the most accurate interest rates and advise you on how best to finance your new Austin area home. Our agents are experts in the Austin area and would be happy to recommend a trusted lender. Contact us today with your questions about buying or selling a home in Austin.

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