Why the Rate Hike Isn't All Bad

  • January 05, 2016

In December, the Fed announced that they would be raising rates for the first time in nine years. This news was met with a variety of reactions, but here’s why it is nothing to panic over.
 
It’s no secret that an increased rate means more expensive mortgage loans. Consumers may initially balk at the idea but the reality is that rates are still lower than pre-economic crash numbers. The slight increase to rates is having a very minimal impact on mortgages.
 
Another thing to keep in mind is that fact that although the rates are increasing, they were kept so low for so long that the increase still won’t hit the highest rate levels we saw in the 2000s. For this reason, housing experts are predicting that rates will remain at low levels throughout 2016 despite increases by the Fed.
 
It is important to show this comparison to consumers when they hesitate on getting a loan for this reason. Raising interest rates, even slightly, can potentially help stabilize our economy and get it back to near “normal” levels. While slightly higher rates can pose an issue of affordability for consumers, it is also predicted that 2016 will bring about a steady growth in the job market thereby also helping the stability of the economy as a whole, and keeping housing affordable.

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