The new rate increase — how it will affect you

    As many of us know, and as was reported on WYFF, the Federal Reserve raised the key interest rate by 0.25 percent (one-quarter of a percentage point).  But, what does it mean for you?

    While investors and credit card customers will be affected, housing sellers and buyers will be affected as well.  According to the article on WYFF.com, “Savers will eventually see a little more interest on their deposits at the bank, and mortgage rates will gradually rise.”

    The increase was expected by many.  As we all know, the economy — as well as the housing market — has improved since the 2008 collapse.  In addition, the national unemployment rate has been cut in half to 5.0 percent with the addition of 12 million jobs in the seven-year time frame, and gas prices are at an all-time low since this all began.  Just look at local gas stations, and you will see the price of gas is below $2.00 per gallon and, in some areas, below $1.75 per gallon.

    The article states the last rate increase occured in 2006.  So, given the healthier economy, it stands to reason that the rate would increase.

    There were some that thought the rate would increase even more.  However, we should all be prepared for more increases in the coming year as the economy and market stay healthy.

    According to Chris Arnold of NPR, there is another factor that could affect the housing market.  While it is often thought that people grow up, get married, buy a house and start families, the younger generation — also known as millenials — is bucking that trend.

    “Looking ahead to next year, one big question will be whether first-time homebuyers finally will return to the market,” Arnold said.  William Wheaton, a housing economist at MIT, says millennials just aren’t settling down and buying houses like past generations — partly because fewer are getting married.”

    According to Wheaton, in recent decades, 30 percent of households were made up of 20 – 35 year olds who were never married.  Wheaton says the 2010 census shows the number to have increased to 62 percent.

    According to Arnold, “Wheaton says it’s one question that has big implications for the future of the housing market.”

    By Jason Michaels

    De Desharnais, a homebuilder and real estate agent in Nashua, N.H., stands in front of a house her company is constructing. She says her company had 32 employees at the height of the housing boom, and now only has six despite the industry's gradual recovery.
    De Desharnais, a homebuilder and real estate agent in Nashua, N.H., stands in front of a house her company is constructing. She says her company had 32 employees at the height of the housing boom, and now only has six despite the industry’s gradual recovery.

    (Picture used from Chris Arnold, NPR as linked above)

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