• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Scott Williams Real Estate

Scott Williams Real Estate

ScottWilliams.com

  • Client Newsletter
  • Blogs
    • Market Mojo Report
    • Market Update
    • Montecito Connection
  • Santa Barbara
    • Maps
    • Histories
      • Downtown
      • Eastside
      • Westside
      • Samarkind
      • Mission Canyon
      • Montecito
      • San Roque
      • Mesa
      • Hope Ranch
      • Riviera
      • San Marcos
      • Waterfront
  • Email
  • Facebook
  • RSS

Will The First Interest Rate Hike In 9 Years Sink The Housing Market?

December 20, 2015 by Scott Williams

by Mark Schniepp • December 28, 2015

On December 16, 2015, the long awaited rise in the federal funds rate by the Federal Reserve Bank was announced. This is the first interest rate hike since 2006.

What impact will this move have on the economy, and especially, the interest rate sensitive housing market?

The rate hike was, as expected, small, (0.25 of a percentage point), and for that matter, relatively meaningless. This “gesture” by the FED doesn’t change much and will have little if any impact on the economy.

when-interest-rates-riseHowever, the initial hike is more of a psychological signal to home owners and potential home buyers that this Is the end of the era of extremely low mortgage rates. Ultimately, the Fed’s measured rate hikes will result in higher mortgage rates which will increase monthly payments. This fi rst hike may induce a rush to refi nance now, and a rush to purchase that new home to lock in the last of the lowest mortgage rates. Since they tend to struggle
on making monthly mortgage payments, fi rst time home buyers would be impacted the most by rising rates.

So while the window remains open on low rates, it will gradually close. Consequently, it’s now time to pull the trigger on that home refi nance you’ve been postponing or that new condo purchase in Santa Barbara.

The Fed is expected to raise rates gradually, packaged in very dovish statements about subsequent hikes throughout 2016 and into 2017. For a very long time we’ve been relying solely on the FED for economic policy making and this is the opportunity for them to continue exercising policy by pushing rates back up as the economic expansion remains intact.

Despite a forecast of a series of rate hikes throughout the coming year, monetary policy will still be accommodative and unlikely to materially slow economic growth. Consumers will face slightly higher auto loan rates and mortgage rates over time, but the infl ation in their incomes will be able to absorb higher costs imposed on them by rising rates, at least as long as the current economic expansion persists.

dr-mark-schnieppDr. Mark Schniepp is Director of the California Economic Forecast in Santa Barbara. The Company prepares forecasts and economic commentary on the regional economies of California.

Filed Under: Market Update, Montecito Connection

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

News and Updates

Montecito Connection: Hit the Jackpot Selling Your Home–My Podcasts Tell You How

September 16, 2021 By Mark Burrell Leave a Comment

Montecito Connection: Montecito Conditions – High Water Everywhere

August 16, 2021 By Mark Burrell Leave a Comment

Market Mojo Report – Mesa Increase in Values Highest on Record

August 16, 2021 By Mark Burrell Leave a Comment

Market Mojo Report – Jan 2018 – Are You Curious?

January 5, 2018 By Scott Williams Leave a Comment

Search content by keyword

Archives

Categories

  • Client Newsletter
  • Homes for Sale
  • Market Mojo Report
  • Market Update
  • Montecito Connection
  • Peach Picking
  • Sold Listing

Follow

  • Email
  • Facebook
  • RSS

Footer

Contact Scott Williams

Scott Williams
President Williams Systems
Berkshire Hathaway HomeServices California Properties
Office: 805 563-4031
Fax: 805 563-0053
Cell: 805 451-9300
Scott@scottwilliams.com
http://www.ScottWilliams.com
Cal BRE # 00628741

Disclaimer

Copyright © 2023 · Blog Site by The Burrell Group · Log in