The Fed And The Interest Rate

The Fed is expected to announce the increase of interest rates this afternoon. As we all brace for the news, the media is highly focused on how this will impact the stock market. We will likely find out this afternoon, but the expected result could be short-term volatility in either direction. A less subtle impact is usually seen in the real estate market. Rising interest rates not only impact the cost of borrowing (it already has), but it can have a direct impact on pricing. 
Rising interest rates impact the availability of capital and demand for investment. Mortgage rates tend to adjust based on speculation of future interest rate changes by the fed. As this rate hike has been anticipated since early this year, banks have already been adjusting interest rates up out of speculation. Credit risk uncertainty can drive real estate prices down. For investors, this may lead to opportunity. 

 


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