As expected, the Federal Reserve increased its benchmark interest rate by .25 percent on Wednesday. Although not directly connected to mortgage rates, it can have an impact. So what does this mean for prospective Bay Area homebuyers?
CNN Money has a good breakdown on the topic. Here are the main takeaways:
- Mortgage rates are still relatively low.
- Rates are rising, but predicted to stay around 4.25-4.30% this spring.
- Those shopping in more expensive neighborhoods and those on the margin of being able to afford a home may be most affected.
- The Central Bank is expected to raise rates three times this year, but “if its actions become more aggressive, it could bring a sharper upswing in mortgage rates.”
With low inventory and more rate hikes in the forecast, the Bay Area market will likely continue to compete at its current frenzy.
Inman has a more in-depth, long-view analysis on the topic (subscription is required). With two more additional rate hikes expected later this year, and more in the years to come, “[a]t some point in that progression, long-term rates will be forced higher, with mortgages above 5.00 percent and possibly approaching 6.00 percent.”