According to meeting minutes released last month The Federal Reserve might be convinced to raise its benchmark interest rate “fairly soon” due to the growth in the economy. Although we still have yet to see how the Trump administration’s proposed policies will affect the U.S. economy many still believe that the raise in interest rates are overdue.
Some investors believe that we will likely see two to three rate hikes this year with one coming as soon as this month as the Fed continues on its path of gradually raising interest rates to combat inflation.
For buyers looking to purchase homes it may be safe to say that the clock has started and taking advantage of historic low rates will soon become a thing of the past. As interest rates rise more buyers will either become ineligible to buy or not be able to afford the kind of home they desire.
Sellers will see less buyers, and due to lower demand, the bubble that has been growing in the housing market, will subside and prices will begin to stabilize. There will be less bidding wars and sellers will have to be more savvy about how they price their home.
Over the past decade the Fed has aimed to raise interest rates where they’ve remained at historically low levels. Higher interest rates would give the Fed more flexibility to ease monetary fluctuations and spark growth in the event of a future recession.