Your real estate wealth rescuer

The Fed Raised Rates, What Does This Mean for You?

I help busy Maryland professionals maximize their returns on real estate sales with ease.
Follow Me

The Federal Reserve raised the Federal funds rate by 0.25%. They did not raise mortgage rates. Mortgage rates did respond to this though with an increase. Today, the 30 yr fixed-rate mortgage rate is 4.16%.

The Fed has said that they will continue to increase the Fed funds rate maybe two or three more times this coming year. They will watch US economic growth and the unemployment rate in deciding whether or not to increase the rate.

What does this mean for you? The mortgage rate does affect how much money your lender will allow you to borrow, which (unless you are paying the difference in cash) affects how much money you can offer. As a general guide, for every 0.5% increase in the mortgage rate, your purchasing power decreases by 4-5%. If you are planning to purchase in 2017, you should keep this information in mind. If mortgage rates increase in 2017 as experts predict, you may have less purchasing power.


(Chart source: Keeping Current Matters).