Last month, the Federal Reserve decided to increase the Fed Fund rates to one-quarter of a percentage point. It has been a decade since the rate was near zero. The significant improvement in the U.S. economy was the main reason for the Fed to make some changes.
According to The Real Deal, the benchmark interest rate is also said to increase its rates around 1 percent point a year for the next three years. If that will be the case, then it will result for the Fed Funds rate to hit 3.35 percent in the next three years.
Fed Chairwoman Janet Yellin said that the said projections are the set reality as they have "confidence in the U.S. economy."
The raise in the rates is expected to bring pressure on long-term interest rates. And according to New York City brokers, this will predict buyers to become more aggressive. Buyers have the tendency to purchase homes and get into the markets before the rates go up again.
However, others are still not worried about the said hike in rates. Stacey Max, a sales manager at BOND New York's Chelsea office, said that "Buyers have been hearing about the possibility of interest rate hikes for so long that they aren't really reacting - not yet, anyway."
Meanwhile, Margo Mohr, an agent at Fox Residential Group, said that "a small jump shouldn't really make a difference." Mohr also added that "Those people who want to finance a purchase have not lowered their purchase price limit, but it is somewhat early."
When it comes to buying real estate in Manhattan and Brooklyn they are reportedly not affected by such rate boost. Buyers do not seem to mind at all. As a matter of fact majority of Manhattan residential sales made in the third quarter of 2015 were even cash deals. To add more to that, around 61 percent of condos were purchased with cash compared to 42 percent from co-ops sales.
Miller Samuel founder Jonathan Miller wrote that "There has been a lot of hyperventilating about whether the Federal Reserve would raise the Federal Funds rate." He added, "It's been a long time coming," he quipped, "but so was the last good 'Star Wars' movie."
As reported by the Capital Gazette, the Fed strongly believes that the economy is already strong enough to handle such. And given the real estate standing in New York City it seems like its home buyers are on top of the game.
