On Wednesday, the Federal Reserve announced raising the Federal Funds rate (the rate which banks lend money to other banks for overnight borrowing) by one quarter percentage point. Historically, an interest rate hike sends Realtors into an emotional frenzy. This time, however, I have heard very little push back and I think this is why:
1. We all anticipated the rate hike. Generally, we don’t like surprises, so it just confirmed what we already thought.
2. We are happy the economy is performing better; unemployment is under 5% (4.7% in February); 200,000 jobs are being added per month; and the stock market is at record levels (actually closing higher on Wednesday).
3. Mortgage rates remain historically low. After the announcement, the 30-year rate rose from 4.21% to 4.30%. If you’re like me and purchased your first home with a 12% mortgage, this still seems like a pretty good deal.
4. Real estate sales are gaining steam. In our market area, 65 homes went under contract from Wednesday to Friday. 71 homes are pending, which means they are scheduled to close.
As Realtors, we can’t predict the future. But for now, we are seeing positive economic signs, confidence and optimism. I’ll take that any day!
Principal, Janet McAfee