The Fed Rate Hike: Laymans Terms

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I'm sure many of you have heard that the Federal Reserve decided to release their grip on the historical low interest rates. Essentially since the recession they've been at 0.00%. After other factors get included that left many people purchasing homes with a rate between 2.85% and 4% over the past 3-4 years. Insanely good rates considering a healthy market has rates around 5.5%-6% and over the past 30 years we've seen rates get up to 20% in the early 80s. 

So, does this change mean that we'll see those rates get to 5.5%? The easy answer: not yet. Rates on conventional loans may see a small immediate increase (4.25% or 4.185%) but FHA and government insured loans will stay around 4% for the time being. By this time next year they may be closer to 4.75-5%. Still a great rate. What will see an immediate impact are things like your credit card interest rate and car loan rates. Those will jump in a month or two. 

All of this being said, it makes 2016 a great time to buy before we see rates get into the 5% range in 2017 and beyond. It's also a great time to pay down that small debt that you've been sitting on before the rates on those cards jump!

Overall the release on rates is a good sign that our economy is improving and just like the past 3 years, we expect the housing market to improve as well.

Hopefully this was helpful and if you have more questions we are always just an email, phone call or comment away!