Experts on Recent Interest Rate Hike: Plan Now

The kick-off of 2016 combined with the Federal Reserve’s recent decision to inch up the interest rate might have provided you with a ready-made new year’s resolution: don’t put off home-buying any longer!

Bay Meadows is delighted to have new homes available for purchase, once again, with Meadow Walk offering its first release on January 23. And just in time, too, as numerous reports and experts see the recent rate hike, albeit a small one, as a signal of things to come.

In a story titled “Fed raises interest rates, pace of future rate hikes will be ‘gradual’” the San Jose Mercury News recently reported that the cost of “home mortgages is most likely headed higher after the Federal Reserve raised interest rates …. for the first time in nine years.”

The Christian Science Monitor offered some blunt advice: “the run of low mortgage rates will certainly end eventually. Whether it’s sooner or later, there is simply no need to be caught by surprise. Evaluating where you stand now, and how your housing budget could be affected when mortgage rates do go up, could save you thousands of dollars in interest costs. In other words, it’s not time to panic, but time to plan.”

The Federal Reserve's Janet Yellen recently announced the decision to raise interest rates.

The Federal Reserve’s Janet Yellen recently announced the decision to raise interest rates.

The Fed’s unanimous decision to increase its key federal funds rate to 0.25 percent — up from at or near zero percent — changes what banks charge each other for overnight loans. Because banks and other lenders use this benchmark to determine the rate on loans from mortgages to credit cards, according to a story by Business Insider, “consumers will see a difference.”

A New Year’s Eve report from NBC News reported that Mortgage buyer Freddie Mac said that as of December 31, the average rate on a 30-year fixed-rate mortgage rose to 4.01 percent from 3.96 percent a week earlier. That rate has risen from its 3.87 percent average a year ago and has been steadily increasing since late October.

According to CBS News, David Lafferty, chief market strategist at Natixis Global Asset Management, said he believes the Fed will hike two to three more times, or another roughly 75 basis points, in 2016. “You’ll start to see interest on savings going from nothing to slightly more than nothing if the Fed keeps raising rates.”

Sean Becketti, Freddie Mac’s chief economist, said in a statement, “While we expect the 30-year mortgage rate to be above 4 percent in early 2016, we anticipate rates will gradually increase, averaging 4.4 percent for the year.”

The old-school adage “Why put off until tomorrow what you can do today?” might really add up when contemplating your 2016 goals and whether to buy now or to wait. rates Bay Meadows high on the list for walkable locations to live on the San Francisco Peninsula and for good reason! Bay Meadows has a high Walkscore because it is steps from shopping, groceries, parks, Caltrain, a farmer’s market and a few short miles from downtown San Mateo with its bourgeoning restaurant scene.