If you are planning on buying a home in the near future, there is good news for you from the Federal Reserve about interest rates.
The Federal Open Market Committee unanimously voted to maintain the federal funds rate at a range of 1.75-2 percent.
Fed holds benchmark interest rate steady for now
The Federal Open Market Committee wrapped up its fifth meeting of 2018 with a unanimous vote to maintain the federal funds rate at a range of 1.75-2 percent, according to the group’s statement.
Though rates will remain the same, the Fed also alluded to a strong national economic climate, which will likely result in future rate hikes later this year.
With only three meetings left in 2018 – Sept. 25-26, Nov. 7-8 and Dec. 18-19 – it’s not hard to narrow down when those increases might happen. The New York Times reported that the paper expects them to occur in September’s and December’s meetings.
Why the Fed raises rates
The Federal Reserve typically decides to increase interest rates during times of economic growth. But just because FOMC members voted to maintain the current rate doesn’t mean they’re not optimistic about current conditions.
In fact, the statement issued after the meeting pointed to job gains and household spending as indications of strength.
In the most recent Employment Situation, the Bureau of Labor Statistics reported an increase in nonfarm payroll employment of 213,000 in June. Wages also increased, with the average pay increasing 5 cents to $26.98 per hour.
The increased spending was primarily focused on accommodations and restaurants, a sign of strong consumer confidence.
Because of these positive signals, many economists are confident that there will be two rate hikes before the end of the year.
How consumers can prepare for increased rates
Though there’s no rate hike to respond to this month, consumers can take steps to prepare for any increases that might occur in the coming months.
Although a rate hike likely won’t have an immediate effect on most consumers’ day-to-day financial lives, they can see gradual changes in interest rates and other costs over time.
Rate changes could lead to higher credit card interest rates. As such, consumers who are carrying a balance now might begin to strategize a plan to pay down their debt.
Mortgage interest rates may also begin to escalate. So far in 2018, rates have grown from an average of 3.95 percent for a 30-year fixed-rate mortgage at the beginning of January to 4.54 percent for the same product during the week ending July 26, according to Freddie Mac’s Primary Mortgage Market Summary.
For prospective homebuyers hoping to close on a purchase this year, it may be smart to get preapproved soon.
* Advertising Material: To the extent that the information in this post is interpreted as attorney advertising in accordance with the Illinois Rules of Professional Conduct or within the meaning of state bar rules from all other localities, this statement is made pursuant to those rules.
Specialties: Specialization claims are prohibited by Illinois Supreme Court Rules and we do not claim to be specialists. The content of this e-mail is organized and presented for the sole purpose of general information. None of the included content should be construed as legal advice. Viewing this e-mail or e-mailing the account holder does not create an attorney-client relationship. NOTICE: This page may be considered advertising material.
The Law Offices of Lora Fausett P.C. provides real estate law services including loan modifications, buying and selling legal assistance, short sales and deeds in lieu, mortgage foreclosure defense, and more.
For Information Call 630-858-0090