This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
I received a lot of questions about the interest rate increase by the Fed last week, so I turned to a mortgage expert, Troy Toureau (NMLS ID #5618) of McLean Mortgage Corporation, to guest-author this week’s column. Thanks Troy!
Question: I am planning to purchase a home early next year, yet I saw that the Federal Reserve Board (Fed) just raised interest rates. Will I still be able to get a good rate when I am ready to make an offer?
Answer: Barring unforeseen circumstances, the answer is absolutely yes. There are several reasons rates will remain attractive in the near future:
1. We are still dealing with historical lows
One must remember that the Fed is raising rates from record low levels. As a matter of fact, rates have been below five percent for only the past five years. For the 30 years before that, they averaged over seven percent. According to Freddie Mac’s chief economist Sean Becketti, “mortgage rates will tick higher but remain at historically low levels in 2016.”
2. The Fed rate and mortgage rates are not directly correlated
Even if the Fed continues to raise rates, they are raising short-term rates. Mortgage rates are based on long-term rates. You can see from the chart below that the last time the Fed raised rates significantly, from February 2004 to June 2006, mortgage rates stayed relatively flat.
3. Rates will increase gradually
Here is an excerpt from the statement released after their meeting: “The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”
Becketti states, “we take the Fed at its word that monetary tightening in 2016 will be gradual, and we expect only a modest increase in longer-term rates.”
Chief economist for the National Association of Realtors Lawrence Yun agrees. Yun indicated that an uptick in short-term rates shouldn’t have a big effect on those looking to borrow in 2016. With rates going up by such a small amount, the Fed’s move could serve as a stimulant to the economy.
That being said, the Fed’s action to raise rates could be the beginning of the end of the easy monetary policy we have enjoyed for the past several years. So even if rates do not go up significantly next year, it would behoove you to purchase sooner rather than later. Basically, we have had a sale on money going on and sales do not last forever.
If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781. McLean Mortgage Corportation | NMLS ID #99665 (www.nmlsconsumeraccess.org). McLean Mortgage Corporation is an Equal Housing Lender.
In loving memory of Joseph Robert Kapacziewski, who passed away in 2023 at the age of 41.
In loving memory of James Stuart Edmonds, who passed away in 2023 at the age of 84.
A man was shot in front of a lounge on Columbia Pike early this morning, continuing a string of violent incidents.
Good Friday evening, Arlington. Today we published articles that were read a total of 17124 times… so far. 📈 Top stories The following are the most-read articles for today —…
YULA’s ultimate frisbee spring season is now open for registration. We offer programs for middle and high schoolers – open to all players, whether they are new or have previous experience.Middle SchoolIn the Middle School league, mixed-gender teams practice once during the week and have games on Sunday afternoons. Spring league is a fun, safe, and positive environment. The season begins mid-March and wraps up with a tournament in early June. There are several options for practice days, so we can often work around schedule conflicts with other sports & activities.High SchoolThe High School program is organized by school of attendance and teams are classified by gender. New players will learn the basics in a supportive, welcoming environment. Experienced players will continue to develop their skills, and enjoy competition with other high school programs. The season concludes with a state level championship tournament in late May.All players are guided by experienced coaches who emphasize sportsmanship and good spirit. Ultimate is a fun sport with great camaraderie!YULA does not want finances to limit anyone from participating. Our middle school program offers a “Pay What You Can” cost structure and our our high school program is offering a $50 discount to new players.Visit our website to register and learn more. Sign up with a friend, but don’t delay, the season starts in March!http://www.yula-ulti.org
The Arlington-Aachen High School exchange is returning this summer and currently accepting applicants.
The sister-city partnership started in 1993 by the Arlington Sister Cities Association, which seeks to promote Arlington’s international profile through a variety of exchanges in education, commerce, culture and the arts. The exchange, scheduled June 17th to July 4th, includes a two-week homestay in Aachen plus three days in Berlin. Knowledge of the German language is not required for the trip.
Former participants have this to say:
_”The Aachen exchange was an eye-opening experience where I was fully immersed in the life of a German student. I loved biking through the countryside to Belgium, having gelato and picnics in the town square, and hanging out with my German host student’s friends. My first time out of the country, the Aachen exchange taught me to keep an open mind, because you never know what could be a life changing experience.” – Kelly M._
Valentine gifts for someone special or for yourself are here at George Mason University from noon -4pm on February 14, 2023. Satisfy your sweet tooth with Kingsbury Chocolates, find a handmade bag from Karina Gaull, pick up treats from Village