how interest rates affect boston real estate market

What do the Fed’s Rate Hikes REALLY Mean for Real Estate?

The Fed’s recent rate hike . . . what does it REALLY mean for Boston real estate? 


Hi, everybody. It’s Ruth. I wanted to quickly talk about the recent hike in rates from the Federal Reserve, and we’re probably going to see a couple more of these rate hike through 2017.

And we have real estate agents and mortgage brokers have a lot of questions about the rate hikes because consumers do believe that this will somehow affect the mortgage rates, and thus home values as well.

So what does the Federal Reserve rate hike really mean? So the reason the Federal Reserve raises rates is it maybe tapper off a little bit of inflation, seeing the market is being overheated. It’s usually a sign that there is positive economic activity going on. And it is the Federal Reserve’s way of kind of balancing out to maybe encourage more savings, encourage too much pressure on wage increases and tapper off inflation.  

So what does this rate affect? Well it’s a short term rate. The Federal Reserve is an overnight rate, interest rate, so this will affect mostly your short term loans, your credit, your credit cards, your car loans, and your home equity lines of credit. It will affect those rates. So what about the mortgage rates? Well, mortgage rates are mostly affected by the longer term rates of the treasury market. And those have not been really increasing lately. And that has little relation, really, to the Federal Reserve rate and the short term rates.  

There are several different interest rates, and I’m not going to bore you with those details or bore myself with those details, but if you want to learn more, please feel free to give me a call, and we can discuss it. I do want to say that if you are working with a mortgage broker or a real estate agent who is telling you that you need to quickly sell because your home is going to be worth less due to an interest rate increase or quickly buy because mortgage rates are soon going to go up, that means either they don’t understand the market, or they’re lying to you. Please fire that agent and find somebody who understands that your mortgage rates and your federal reserve rate are not moving in unison, and somebody who’s going to tell you the truth and never pressure you into buying or selling at any time. 

If you have any questions you want to discuss, call me, write me a text, email me. I love hearing from you. Thank you so much.