An economist thinks there won't be much impact on housing after the Federal Reserve recently raised short-term interest rates.
The "Fed" raised federal funds rates for the first time since the 'Great Recession' hit in 2007. Marquette University professor David Clark works with the Wisconsin Realtors Association. While the rate was an increase, he says the rates had been so low for so long, it shouldn't have a harsh impact on mortgage rates...
".....now if the Fed is able, through those actions, is able to keep inflation from evolving, the effect on long-term rates should be relatively minor....."
As of late last week, some of the mortgage rates had actually dipped to 3.96 percent following the rate incease announcement. The average 30-year mortgage rate is up slightly from 3.83 a year ago and from 3.76 percent in late October. Clark says inflation is key to determining the longer-term loans.
He says if inflation stays low, lenders will keep rates about where they are now with low inflation. But if it looks like inflation is coming, lenders will build that inflation into the long-term rates.
