The Fed Just Raised Interest Rates. 3 Ways That Will Impact You.

Federal Reserve Chairwoman Janet Yellen Testifies To Senate Committee On Dept's Semiannual Monetary Policy ReportAs the Fed actively tried to boost the housing market following the crisis, the rate on a 30-year fix mortgage fell its all-time low in November 2012, at just 3.31%. But as the Fed raises its key interest rate, the cost of a home loan is moving higher as well. As of last week, the average interest on a 30-year mortgage was 4.21%, and in the next two weeks, it could rise to 4.5%, forecasts Matthew Pointon, a property economist for Capital Economics. By the end of 2018, look for mortgage rates as high as 5.5%, he wrote in a recent note to clients. Meanwhile, home prices are expected to rise 4.6% in 2017, according to a Zillow survey of economists. This means new home buyers could be hit by a double whammy of higher home prices AND higher borrowing rates.

“When you combine higher mortgage rates with increasing home values, mortgage affordability starts to suffer, and buyers will have to spend more and more on their monthly payments,” Zillow Chief Economist Svenja Gudell noted in a recent press release.

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