In much of the country, both new and existing home sales increased in January. This continues a trend first noticed in an extremely busy December, and also signals we are seeing more than just a post-election and World Series bump. Now is the right time to buy with mortgage rates going up.
On Wednesday, the Federal Reserve raised its benchmark interest rate and signaled the likelihood of additional rate hikes later this year, home buyers will see mortgage interest rates go up. As of March 2017, according to Bankrate, the rate on a 30-year fixed mortgage has increased by 81 basis point since before the election, in which time the Federal Reserve has raised interest rates once. While the Fed does not have the ability to directly set mortgage rates, it does create the monetary policies that indirectly affect these rates.
The Fed’s thinking is that the economy is a lot stronger now than it was in the first few years after the Great Recession ended in 2009, when ultra-low rates were needed to sustain growth. With the job market in particular looking robust, the economy is seen as sturdy enough to handle modestly higher loan rates in the coming months and perhaps years.
If you are buying in Chicago, the market remains competitive. Property is selling quickly and buyers are receiving many offers the day property goes on the market in popular neighborhoods such as Lincoln Park and Lakeview. Buyers should be ready to make a competitive offer quickly for any real estate they are interested in.