In early March, the Federal Reserve decided to raise short-term interest rates by 0.25 percent, as USA Today reported. While the increase didn’t necessarily come as a surprise to most people, those within the real estate and homebuilding industries were concerned about what the interest rate hike would mean to them. Would people stop buying homes suddenly because of the rate hike?
The good news is that the interest rate hike isn’t having much of an impact on homebuyers, according to CNBC. In fact, some industry experts are predicting that the rate hike could actually help the housing market in America. This is encouraging news for anyone looking to buy a home in the coming months.
Here are just a few of the reasons why the Federal Reserve’s interest rate hike could be good news for everyone.
Potential homebuyers are starting to realize how low mortgage interest rates actually are.
Even though mortgage interest rates are going to increase slightly due to the Federal Reserve’s interest rate hike, the truth is that these rates have been at a historically low level for several years now. People have gotten so used to the low rates that they have almost taken them for granted, but this increase signals that won’t be the case anymore. There’s a good chance the Federal Reserve could increase the interest rate even further in the coming months and years, which means that investing in a home now means that you can lock in lower rates and save thousands of dollars over the lifetime of home ownership.
Lenders are relaxing their standards and offering more loans to those who want to purchase homes.
Because interest rates were so low in recent years, lenders didn’t have any shortage of people coming to them asking for loans. This meant that lenders were very selective in evaluating applicants before approving home loans. Now that the interest rates have gone up, CNBC notes that many lenders are likely to relax the standards they’ve had in the past and consider offering more purchase loans to people. Higher interest rates will also discourage many current homeowners from trying to refinance their loans, which means that it’s likely that lenders will be more open to loan applications from new homebuyers.
Rents are rising and forcing people to seriously consider home ownership.
The Federal Reserve’s interest rate hike is going to have an impact on more than just homebuyers and homeowners. It’s also going to impact renters. Renting has become an increasingly popular option in the past decade as people move more often for work and appreciate the convenience of never needing to worry about maintenance and upkeep costs. However, renters are likely to see their rents increase during the next year or two, as well, as more buyers invest in rental properties to take advantage of the renter market.
This is a good reason to consider buying a home instead. Owning a home is an investment and one that will provide a return instead of just a roof over your head. It also means you can avoid the fluctuations of the rental market, arriving at a stable and consistent mortgage for a property that meets all of your needs. Forbes suggests that many current renters will be moving to buy homes in the next few years, which also means that property values are likely to increase, in turn, meaning your home investment today could increase significantly in a demand market.
Get started on finding your home today with the help of Phillips Real Estate. Our agents are standing by and ready to help you locate the perfect home in central Oklahoma. Give us a call at 405-368-9409 to get started.