Homebuyers: Don’t Panic…Fed Interest Rate Hike Won’t Hurt You

Westcoe Realtors, Riverside Ca…OMG…the Fed raises it’s rates by 1/4%, and the media would have you think the world is about to stop spinning! Look out Henny Penny, the sky is falling…and with it, your ability to get a home loan for whatever type of property you wanted to buy. So long…there goes the American dream of home ownership.

Well Toto…we are in Kansas…the sun will come up not only today, but tomorrow as well (even with El Nino, the sun is out there somewhere), and the interest rates on 30 year fixed rate home loans remain LARGELY unchanged!

Please….please…please understand that the Fed interest rate hike is all about what banks are charged to borrow money from the Fed, and will have nothing to do with 30 year loan rates. The Fed rate hike of last week will only have an effect on short term rates (think credit cards, auto loans, etc.), not long term rates, like home mortgages.

As a matter of fact, in case you hadn’t noticed (and why would you…the media has you ducking for cover), in some cases, interest rates for 30 year home loans have dropped since the Fed made their announcement…and where was that on the National news? Trust us on this one…you can still borrow today the same amount you could borrow yesterday. Our 30 year rates did not move up.

The moral to this interest rate story is that once again, don’t get too wrapped up in whatever the national media has to say about housing. Their job is to garner ratings…and they can do that by scaring people. After all, what sounds better as a new headline: Potential home loan rate hikes negatively affect millions of home buyers…..or…Fed rate hike to have no effect on home loans.

Media buzz wants the former….the truth lies in the latter.

Take care, and as always, if you have any questions you would like to see addressed in this blog, let us know…we are happy to help in any way we can.

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