
Over the last few weeks I have been asked multiple times, what does the Fed raising rates by .25% mean for Amarillo?
Yes this is the first interest rate hike in almost a decade so logic would say it's a big deal but the reality is it is unlikely to have much of an impact on the Amarillo real estate market at all. My experience from my years in the mortgage bank is that Fed rate increases do not impact mortgage rates percentage to percentage. For example we can look back to 2004 thru 2006 when the Fed rates increased 4% and mortgage rates only increased about 1%.
Now in saying all that we must keep our eyes on what the Fed does over the coming year as they have signaled that this is not the only rate increase we will see. Quite a few experts expect a gradual increase that could look like a .25% increase every quarter for the next year. So this initial .25 increase won't have a major impact but if we see the possible increase some predict of 1.25% over the coming year then mortgage rates will see upward movement.
How would this larger rate increase impact our Amarillo market? Currently we have a very stable market, though with prices trending upwards you can make the case that it is a sellers market. Though it could change a little as with a .25% mortgage rate increase if you are currently qualified for $200,000 the house you can qualify for with the same monthly payment is closer to $194,000. That doesn't sound like a huge change but do this a time or two over the next year with a mortgage rate change of .5% and it can make a big difference in getting the house you want or into the neighborhood you are looking for.
In saying all that I don't expect much of a change in the Amarillo real estate market in the short term, though I do think we could see some changes in the market in the next year to 18 months. So if you are thinking of buying in the near future, you may want to consider buying sooner than later.
Yes this is the first interest rate hike in almost a decade so logic would say it's a big deal but the reality is it is unlikely to have much of an impact on the Amarillo real estate market at all. My experience from my years in the mortgage bank is that Fed rate increases do not impact mortgage rates percentage to percentage. For example we can look back to 2004 thru 2006 when the Fed rates increased 4% and mortgage rates only increased about 1%.
Now in saying all that we must keep our eyes on what the Fed does over the coming year as they have signaled that this is not the only rate increase we will see. Quite a few experts expect a gradual increase that could look like a .25% increase every quarter for the next year. So this initial .25 increase won't have a major impact but if we see the possible increase some predict of 1.25% over the coming year then mortgage rates will see upward movement.
How would this larger rate increase impact our Amarillo market? Currently we have a very stable market, though with prices trending upwards you can make the case that it is a sellers market. Though it could change a little as with a .25% mortgage rate increase if you are currently qualified for $200,000 the house you can qualify for with the same monthly payment is closer to $194,000. That doesn't sound like a huge change but do this a time or two over the next year with a mortgage rate change of .5% and it can make a big difference in getting the house you want or into the neighborhood you are looking for.
In saying all that I don't expect much of a change in the Amarillo real estate market in the short term, though I do think we could see some changes in the market in the next year to 18 months. So if you are thinking of buying in the near future, you may want to consider buying sooner than later.