The Feds Interest Rate Hike and why its good news for you

 

Hello from beautiful San Diego!

After months of wondering what the Feds were going to do with interest rates we have finally received our answer. There has been a lot of back and forth, hinting at a possible interest rate hike. Brexit probably put the brakes on it happening earlier than it has. Then the Donald vs Hillary battle pushed it off even further. I have been warning my customers for months that if you are ready to refinance or purchase, now is the time. As the economy creeps up, up, up and away the interest rates will continue rising.

Its Been a scary ride for some people wondering if they should refinance or wait, purchase or hold off. If you heeded my warning in these past months you have one of the best rates anyone will ever see. The good news is that if you didn’t act when you had the chance, the rates are still fantastic. Historically our current rates are still amazing.

There is more good news on the horizon. It’s not all gloom and doom. When the Janet Yellen raised the rate today by 25 basis points (.25%) she signaled to the world that the Fed thinks the economy is growing. Do you know what happens when an economy grows? Incomes raise, home prices go up, savings returns increase. All of these things are fantastic and you should be looking forward to all of them. However when they raise too quickly we also can have inflation which will lead to less purchasing power and possibly another bubble like the one in 2008.  By raising the Interest rate the Fed has effectively put the brakes on the economy so that our GOOD economy growth doesn’t turn into BAD economy growth i.e. inflation.

So keep your head up California, because while the interest rates may be creeping up so is the labor market, your paycheck, home prices and therefore the equity in your home!

 

Untill Next time…..

Your Home Loan Amigo

Eric Jurotich

 

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