We’re excited to have our friend Matt Nader join us today to talk about the recent rises in the federal fund interest rate and the treasury bond yield and how they affect the consumer. 

The economy is starting to improve, which is good. This has resulted in the Fed increasing the overnight discount rate by 0.25%. This rate doesn’t directly affect long-term mortgage rates, though. It mostly affects auto loans, credit cards, and home equity lines of credit. 

However, with the improving economy, mortgage rates are on the rise. We have gone up by about 0.65% in the last four months due to the fact that money is starting to flow out of the bond markets and into the equity markets. In the short term, this is probably going to lead to a jump in buyer activity. They will be nervous about rates going up even more and will try to get into the market as soon as possible in order to avoid that. If rates go up even higher, a lot of people may be priced out of the market.

“Even when rates go up, you can still afford to purchase a home.”

With low inventory right now, we’re seeing a pretty competitive market. Getting some more inventory would certainly relieve some of the buyer stress we’ve been seeing. In the long term, I expect increased interest rates to weed out some of the less serious buyers in the market. 

Even when rates go up, you can still afford to purchase a home. Your buying power might go down a bit, but it’s still a good time to lock in this type of rate. Don’t worry about conditions you don’t have any control over. Just reach out to us and we can help you out.

If you have any other questions about interest rates or are thinking about buying or selling a home, give us a call or send us an email. We would love to hear from you.