The Federal Reserve is expecting to raise interest rates as soon as March of this year.
The new Presidential Administration team occupying the White House is expecting a continued growth in the US Economy that has previously flourished as a result of the Obama Administration. They expect that our new President will invoke more jobs, and theoretically as a result of more people being employed, more money will be made for people and for businesses.
More money being made, results in more money being spent. This cyclical regime of the flow of money is what (in theory) will create a thriving economy where everyone earns and everyone spends. When people have the money to pay back and pay off their large debts like credit card, home, auto, and student loans, the Federal Government can decrease their debt.
The problem with the Federal Reserve wanting to decrease their debt is that they gather money for the debt by hiking up interest rates because they assume that if we make more money we can pay more in interest. This means that the percentage that you pay back to the bank every month for your existing home loan and the cost for you to borrow money for the purchase of a new home, goes up. Sure, ideally we’ll all be making more money, but if the Fed is forcing you to also spend more money, how much of this new increase in income will you really see?
With the Federal Reserve strongly indicating interest rate hikes soon, those of you who are interested in refinancing or purchasing in the near future should definitely commit sooner rather than later. When interest rates go up, not even the Federal Reserve knows when it might come back down, as the Fed has noted their concern about the ambiguity of fiscal policies coming from the new Presidential Administration. In fact, the Federal Reserve is predicting the possibility of up to three rate hikes this year alone. That being said, there is likely only a small margin of time for you to take advantage of financially tolerable interest rates. If you haven’t yet done your application for refinance or talked to one of our Loan Officers about purchasing your new home, it’s time to get started!
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WHITNEY RUSH, VALLEY WEST MORTGAGE