The world of real estate and mortgages is constantly evolving, and the recent Federal Reserve hike in March has brought about significant changes. For homeowners, homebuyers, and real estate professionals, it is crucial to stay informed about the latest news and developments in the market. Kevin Martini, a Certified Mortgage Advisor and Raleigh Mortgage Broker, goes beyond the headlines and shares everything you need to know about the impact of the recent Fed hike on mortgage rates in Raleigh.

To begin, it’s important to understand that the Fed is the central bank of the United States. It is responsible for setting monetary policy, which includes controlling interest rates. While many people know that the Fed’s decision to raise interest rates can affect the economy, the impact on the average person looking to buy or refinance a home may not be as clear.

The Relationship Between the Fed and Mortgage Rates

A higher Federal Funds Rate does not mean higher Raleigh mortgage rates because there is no direct relationship between the Federal Funds Rate and fixed-rate mortgages.

Kevin Martini

The Fed doesn’t directly set mortgage rates, but its actions can have a significant impact on them. When the Fed raises interest rates, it makes borrowing more expensive for banks. As a result, banks may raise their own interest rates, including the rates they charge for mortgages. Here are some things to keep in mind:

• A Fed hike doesn’t automatically mean mortgage rates will go up. There are many factors that can influence mortgage rates, including inflation, the housing market, and global economic conditions.
• The impact of a Fed hike on mortgage rates may not be immediate. It can take weeks or even months for the effects to be felt.
• The size of the Fed hike can also affect mortgage rates. A small hike may have a minimal impact, while a larger hike could cause rates to rise more sharply.

What a Fed Hike Means for Homebuyers

If you’re in the market for a new home, a Fed hike could affect the affordability of your mortgage. Here’s what you need to know:

• A higher mortgage rate means a higher monthly payment. If you’re shopping for a home, it’s important to factor in the potential impact of a Fed hike on your budget.
• A Fed hike could also make it harder to qualify for a mortgage. Lenders may require higher credit scores or larger down payments if they anticipate a rise in mortgage rates.
• If you’re considering an adjustable-rate mortgage (ARM), a Fed hike could mean your monthly payment will go up when your interest rate adjusts.

What a Fed Hike Means for Homeowners

If you already own a home, a Fed hike could impact your finances in several ways:

• If you have an adjustable-rate mortgage, your monthly payment could go up when your interest rate adjusts.
• A Fed hike could make it more expensive to refinance your mortgage. Higher rates mean a higher monthly payment, which could make refinancing less attractive.
• If you have a fixed-rate mortgage, a Fed hike won’t impact your monthly payment. However, it could make it harder to sell your home if potential buyers are deterred by higher interest rates.

Common questions answered by Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini

Should I wait to buy a home if I think a Fed hike is coming? There’s no easy answer to this question. If you’re ready to buy a home and can afford the monthly payment, it may not make sense to wait since real estate is a long-term investment.

How much could mortgage rates increase after a Fed hike? There is no direct relationship between the the Federal Funds Rate and the fixed-rate mortgage rates. There are many factors that influence fixed-rate mortgage rates so it is impossible to predict exactly how much mortgage rates will increase or decrease after a Fed hike.

Can I lock in a mortgage rate before a Fed hike? Yes, the Martini Mortgage Group offer rate locks that allow you to lock in a specific interest rate for a set period of time. This can give you peace of mind knowing that your rate won’t change before you close on your mortgage.

Will a Fed hike affect my existing mortgage? If you have a fixed-rate mortgage, a Fed hike won’t impact your monthly payment. However, if you have an adjustable-rate mortgage, your monthly payment could go up when your interest rate adjusts.

The Bottom Line by Kevin Martini

Real estate is a long-term investment and short-term market conditions or Fed actions should not influence your decision to buy a home if homeownership is right for you and your family. If you’re in the market for a new home or considering refinancing your mortgage, it’s important to keep an eye on the Fed’s actions and how they could impact your finances because their actions will impact credit card rates and car loans but not necessarily mortgage rates.