Effects of the Fed’s interest hike on Portland real estate market
Federal Reserve raised interest rates yesterday from a range of 0% to 0.25% to a range of 0.25% to 0.5%. This is the first raise of interest rate in a near decade since the recession. What does this mean for home buyers? Not that I am biased as a Portland real estate agent against providing the true picture of the matter, the fact is that mortgage rates will not increase anytime soon. The mortgage markets are tied to bonds and different financial market than the area where the interest rate hike dictates. This does not mean the mortgage rate will stay the same. It will slowly go up in the next couple of years. I believe the mortgage rates will probably stay the same for the duration of 2016. The current mortgage rate in Oregon for 30 year fixed is 3.89% and 3.08% for 15 year fixed. The rate may increase to 4% in 2017 but otherwise it will rise very slowly at the current rate of economic endeavor.
The Fed raising interest rate means two things. 1) the economy is performing well without any foreseeable crash and 2) Federal stimuli since the recession is ending. People have mixed opinions about this statement that brings either confidence or anxiety. Is the economy going strong in the next few years or is it crashing due to the Fed’s ending of government stimulus. The answer is that the economy will likely continue strong without any major episode of crash because the Fed will closely monitor the growth and will take measure to control the growth of inflation and rates.
People thinking about purchasing homes in 2016 can relax. If anything, the rate hike should boost their confidence of the economic performance while taking advantage of the low mortgage rate that will unlikely change in 2016. This is actually a great news for home buyers. For existing home owners, it may be a good time to consider refinancing while the train is still at the station. In Portland, Oregon, the local economic forecast for 2016 is looking great. It is currently a seller’s market, meaning there are more buyers than people selling houses so that it is to sellers’ advantage. If you are considering buying a home in PDX or the metro area, you should definitely take action in 2016.