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What’s Behind Rising Interest Rates?

As many experts predicted, the Federal Reserve raised its interest rates by 0.25% in December. These same experts believe that this will be one of many incremental increases to come throughout the course of 2017. Although rising interest rates worry many would-be buyers, it’s a great sign that the economy is strengthening, and there’s no reason why you should put off buying your next home.

Rising Interest Rates Signal a Strong Economy

When the Federal Reserve raised its rates in the last quarter of 2016, many people viewed this as a negative. However, per market analysts, a climbing interest rate reflects a strong economy in which future inflation is predicted. When we live in a strong economy, workers are more likely to receive raises, and companies feel more secure in passing cost increase onto consumers. The same can be said for the real estate industry, and slightly rising interest rates are nothing more than a reaction to a favorable future economy.

rising interest ratesA Potential Increase in the National Deficit

There is much speculation that President Trump will cut taxes for millions upon millions of American households, and per many of his proposals, he’ll increase national spending at the same time. This will cause the national deficit to grow and result in more borrowing, thereby pushing inflation even more. Consumers themselves will have more money to pay for their loans, which means interest rates will likely continue to climb – albeit slowly.

Will Rates Keep Climbing?

Although the Federal Reserve only raised its rates slightly – and it was the only increase for all of 2016 – it is safe to assume that these rates will continue to climb throughout 2017 due to a strong economy and an increased national deficit. However, it’s also safe to say that the rates will climb slowly, due in part to missed predictions surrounding the GDP. Although it was predicted that the US would experience a 3% GDP growth in 2016, that growth only hit the 2% mark, which signals the fact that some markets are still struggling. Real estate market analysts agree that we may see rates around 4.7% by the end of the year.

Why You Might Want to Buy Now

Although there’s no need to panic over December’s increase, if you’ve been thinking of buying a house, it is better to act now. With interest rates on the move for all the reasons mentioned above, all signs point to steady increases throughout 2017 and likely into 2018, as well. Buying now and locking in a low interest rate for a 15- or 30-year loan could save you tens of thousands of dollars over the life of your mortgage. What’s more, even as interest rates are climbing, home values are on the rise as well. This will likely drive up home prices nationwide.

Interest rates are climbing for a few very significant reasons, and experts believe they’ll continue to do so throughout all of 2017. Buying now can help you lock in your investment just before home values start to skyrocket, which will allow you to enjoy a tremendous return even in the wake of rising interest rates.

above, all signs point to steady increases throughout 2017 and likely into 2018, as well. Buying now and locking in a low interest rate for a 15- or 30-year loan could save you tens of thousands of dollars over the life of your mortgage. What’s more, even as interest rates are climbing, home values are on the rise as well. This will likely drive up home prices nationwide.

Interest rates are climbing for a few very significant reasons, and experts believe they’ll continue to do so throughout all of 2017. Buying now can help you lock in the best rates, and you can also invest in your home before home values skyrocket, which will allow you to enjoy a tremendous return.

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