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Victoria Cottle

Victoria Cottle

Fed Raises Rates and Expectations

Fed Raises Rates and Expectations

This week the Fed announced another rate hike which means the cost to borrow money will go higher. Most of this hike affects short term accounts like credit cards and car loans and variable rate mortgages. Which means if you got a variable-rate mortgage to get into your house and didn’t refinance for a long-term loan, you will experience a rise in your monthly payments. Even a small percentage can result in hundreds of dollars.

Good news is that people with money in savings accounts will be seeing higher savings rates. Also, borrowers after 30-year or long-term mortgages will likely not be affected just yet. However, there is a trend in 30-year mortgages that is driving the rate higher. According to This Month in Real Estate released by Keller Williams Realty reports that in June projected home sales dipped to 5.4 million nationally from 5.6 million last month. Also, the median home price rose to $257K this month up 3.2% from May. Finally, Freddie Mac is reporting that this month the national rate for a 30-year fixed rate mortgage is up to 4.66% from 4.47% in May. Predictions are putting that rate at 5% by the end of 2018. Existing fixed-rate mortgages will not be affected.

Wednesday’s rate hike is the second one from the Fed for this year and the seventh since they began the upward movement in 2015. Adjustable-rate mortgages are modified annually so although the rate hike impact may be delayed it will hit hard. If there are four quarter-point raises in 2018 your monthly payments will go from $84 to $112 on a $200,000 mortgage.

Don’t expect your savings account rate to rise or existing CD rates to change. Most CDs are locked in for several years with an anniversary date where you can make changes. But there are some banks eager for deposits that are offering 2.5 percent for a one-year CD. Top money-market rates are closing in on 2 percent which about matches annual inflation rate. Somethings that people who save haven’t seen in years.

Another product that is affected by the Fed hike is home equity loans or HELOC loans which homeowners use for home improvement. Personal credit cards too. Monthly rates you pay on any of the aforementioned products will go up. Time to pay off those short term loans and cards!

And remember if you, a friend or family member need assistance with selling or buying a home I can help. Referrals and people needing relocation assistance are welcome! Search Single Family homes in Greenville. Search Condos and Townhomes in Greenville.

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