Fed Hikes Rates Again

The Fed is at it again. For the sixteenth time in the latest series that started in June of 2004, they've hiked the Fed Funds Rate by .25%. Why are they hiking rates? Only to keep the economy from growing too quickly, which can result in inflation and drive prices higher on the goods and services we purchase and use every day.

So what does this mean to my real estate clients? Here's the scoop.

The Fed Funds Rate impacts many things including the Prime Rate. Most Home Equity Lines of Credit are based on the Prime Rate. Therefore, if you have a home equity line, your payments are going up. If you carry a substantial balance on your equity line, you could be in trouble with the additional payment increase.

Many adjustable rate mortgages are also tied to the Prime Rate. This means that your ARM payments are going up too.

Worst case scenario--you have an ARM mortgage with a home equity line. Yikes! You know who you are.

It may be time to take a look at the type of mortgage financing you have as it may be time to consider a different loan product better fit for persent market conditions.

As your trusted advisor, I am committed to keeping you updated on the economic events that impact interest rates and how they may affect your real estate holdings. Call for high-quality recommendations no-nonsense mortgage professionals that can help get you out of the above trouble spot.

Lori