Home buyers are expecting a raise in mortgage rate hikes but they seem not to worry about it because Janet Yellen & Co. are bound to give their decision this week whether to raise their rates or not after almost 10 years.
According to forbes.com, rate hike is similar to an indication of economic growth in the US which, in the past few months, is going pretty good. 212,000 jobs are being created every month, consumers are spending and help- wanted ads are all over the place. In contrary to this, Europe, China and Latin America are facing the opposite and experiencing recession. Civil rights groups and labor unions are asking for wage increases for minimum- wage earners.
Though all the events happening to the economy suggest a rate hike, it's still unsure and the odds of having an increased mortgage rate hike is on a 50:50 scale. A gradual increase in rates might not significantly affect the housing market but a sudden raise in borrowing costs might "spook" different markets. It's better for the homeowners and buyers if US Federal Reserve increases rates gradually because if it waits too long and an unexpected crisis arise, it will be left with no choice but to increase rates to high percentage in short period of time.
Redfin Chief Economist Nela Richardson, said "This isn't monetary policy, it's behavioral economics. They're causing a lot of anxiety and emotional angst over something that won't have a big effect if they do it right."
In a report by redfin.com, even if mortgage rate hike reached 5%, homeowners and buyers can cope with the new rates as it's not their main worry. Homeowners and buyers are worrying more about different aspects such as home affordability, competition from buyers, and inventory. Despite of the ongoing crisis in different countries affecting the global market, consumers are not worried and not rushing to purchase new homes before the impending mortgage rate hike.
