What Does The Fed's Interest Rate Raise Mean For Your Mortgage

Posted by Robert DeFalco on Sunday, December 27th, 2015 at 1:50pm.

interest rate hike mortgages 2016

In the wake of an improving economy, the Federal Reserve announced it would be raising interest rates by a quarter of a percentage point, up from close to zero.  There are some who point to the Fed’s continuous interest rate hikes as a root cause of the financial crisis of 2008, so anytime the Fed touches interest rates is going to be a overly scrutinized. The last interest rate hike came in mid-2006. The Fed’s decision to lower rates and keep them close to zero for so long was unprecedented. But it made sense. Since 2007, when the country entered a financial crisis, the Fed kept moving rates lower in the hopes of boosting economic activity. The idea was the low rates would allow consumers and businesses to borrow and spend more.

So what does this interest raise mean for your mortgage?

interest rate hike mortgages 2016

Mortgage rates are going to go up, as economists recently polled expect the conventional 30-year mortgage rate to rise in 2016. But if you are already locked into a 30-year fixed mortgage, you really have nothing to worry about. Most adjustable mortgage rates (or ARMs), however, are reset once per year. That said, if rates rise a number of times before your next is reset, you could wind up paying more.  Luckily, you could avoid the hike by  considering refinancing to a fixed rate loan before long-term rates increase significantly.

Defalco Realty will keep you in the know, ensuring  you have all the tools you need to make your home owning dreams become a reality. Click here for more information on your Mortgage!

DEFALCO LOGO 2

Robert DeFalco

Leave a Comment