Market Report: Fed Announces Rate Hike. What Does It Mean For Consumers?
LendingTree CEO, Doug Lebda, explains what effects the Fed's recent decision could have
“The Fed’s rate hike of 25 basis points will likely not have a significant or immediate impact on consumers for several reasons. But because it is the beginning of several, gradual rate increases that cumulatively add up over time, it shouldn’t be completely ignored. First, the mortgage industry has been expecting a rate increase and has “baked” that expectation into recent mortgage rates. And, because mortgage rates follow 10-year Treasury yields, which don’t rise as sharply as short-term rates, consumers have a bit of time to take action.”
“For borrowers who currently have adjustable rate mortgages the rate hike impact will be slightly bigger. In those cases, it’s probably the best time to refinance into a fixed rate or hybrid mortgage, before rates start to rise. Rates are still incredibly low, historically speaking, and a great opportunity exists to lock in these low rates while they last, especially if homeowners have been procrastinating on refinancing in the past.”
“As for the housing market overall, a rate hike this nominal will most likely not prove to be a barrier for consumers who hope to buy a house. The jobs market, economic strength and home affordability will all play larger role in determining the future of the housing market. But for millennials who have been slow to come to market in terms of housing, they could be priced out as home prices and mortgage rates continue to climb.”