Year End Fed Interest Rate Increase

2015 continued to see domestic and geo-political turmoil with short-lived impacts on markets, interest rates and consequently the confidence of the American and international consumers. These events seemed to parlay themselves into repeated delays by the Federal Reserve in making a commitment to raising interest rates. The Fed’s lack of confidence earlier in the year regarding global unrest and its impacts on our economy, unemployment numbers and job prospects gave way to the realization the American economy had rebounded and was unwavering in the face of domestic and global situations. After much anticipation the rate increase came at the last meeting of 2015 and the Federal Funds Rate was increased by 25 basis points.

The rate raised effects short term loans and savings instruments. Since, most mortgages are longer-term loan instruments tied to movements in the Treasury rate it could be some time before the mortgage markets really begin to feel the effects of the increase. It would be wise not to fall prey to the media’s hype that the increase will have a cooling effect on our real estate market. To the contrary, mortgage rates were virtually unaffected by the rate increase and on the date of the Fed’s decision, the T-bill rates actually declined.

Share:

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on email

Recent Posts