Financial markets have sent a forceful message that the era of super-low interest rates is coming to a close.
The Federal Reserve’s decision Wednesday to raise its benchmark short-term interest rate will slowly push up rates on everything from mortgages and credit cards to savings accounts.
The Fed increased its federal funds rate by 0.25 percentage points. It was only the second increase in more than a decade. Chairwoman Janet L. Yellen said at a press conference that the economy had shown enough improvement in the last year to warrant higher increases and projected three more rate hikes in 2017.
Here’s how the rate hikes will affect your pocketbook.
Mortgage rates are already historically low and the Fed’s short-term rate bump — which indirectly affects mortgage rates — is not likely to make a big difference in the next few months. But, subsequent hikes by the Fed in 2017 could start to really add to the cost of a home.
Zillow and other industry watchers say mortgage rate increases have more of an impact in costly home markets, like San Diego County.
Rates have already gone up since president-elect Donald Trump’s victory.
Since the day before the election, the cost of a typical San Diego County home increased by $50,400 over the course of a 30-year fixed rate mortgage with 20 percent down.
The median home price in the county, $507,500, hit its highest point in a decade in [more...]