Federal Rate Hike Reactions

We knew it was coming, it was just a matter of when. Even before Federal Reserve Board Chair Janet Yellen announced a 0.25% interest rate hike on December 16 (the first in nine years), speculation was circulating.

Here are a few housing-related highlights from a variety of sources:

  • Home buyers, now’s the time to pay attention: Mortgage rates won’t skyrocket overnight, but they are expected to start climbing. A typical rate on a 30-year mortgage is 3.9%. That’s very low. In 2006, mortgage rates were above 6%. – CNN Money

  • “This is the first rate of multiple ones that will be coming up over the next couple of years,” said Lawrence Yun, chief economist for the National Association of REALTORS® (video analysis here). “Consumers should anticipate the broad rising interest-rate environment in their calculation of whether they want to buy a home and the timing of when they purchase it.” – Miami Herald

  • “I have home buyers now that are looking to close their transactions in January and I’ve actually been advising them to hold off,” said Rocke Andrews, a mortgage-loan originator in Arizona and president of the National Association of Mortgage Brokers. He says adjustable-rate mortgages might go up now that the Fed has raised its federal funds rate, but he thinks longer-term mortgages may actually go down a little. – Marketplace

  • “The fed rate doesn’t affect mortgage rates,” said UMB Bank Chief Investment Officer K.C. Mathews. “However, a lot of people will think that with the rate increasing, it might be time to make the big purchases, like a house or car.” – Phoenix Business Journal

  • Thirty-year mortgages are priced off 10-year Treasury note yields, which do rise as short-term rates climb, but not as steeply. Doug Duncan, chief economist of Fannie Mae, expects this week’s Fed hike…to have virtually no immediate impact on Treasury or mortgage rates. – USA TODAY
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