The interest rate is the percent of principal charged by the lender for the use of its money. The principal is the amount of money lent. Banks pay you an interest rate on deposits because they borrow that money from you. Anyone can lend money and charge interest, but it's usually banks.
The Federal Reserve System is the central banking system of
the United States of America. It was created on December 23, 1913, with the
enactment of the Federal Reserve Act, after a series of financial panic led to
the desire for central control of the monetary system in order to alleviate
financial crises. The Fed's can raise, or lower interest rates based on the
current climate of the U.S Economy. Their decisions can affect the cost of
housing, cars, student loans and even the interest on your credit card — though
not all necessarily right away. And when the Fed raises rates, all sorts of
other expenses eventually tick up.
In general, movement of the Fed’s rate does not have a
large, direct impact on long-term mortgage rates. But when the Fed’s rate goes
up, banks find ways to pass their higher borrowing costs along to consumers,
and because long-term mortgage rates are set in stone, they also factor in the
anticipation of future rate increases.
The Federal Reserve
announced it would raise interest rates and steepened its outlook for
hikes in 2019 and 2020.
After a two-day meeting, the Federal Open Market Committee
unanimously voted to increase its benchmark fed funds rate by 25 basis points,
to a range of 1.50% to 1.75%. It was the sixth rate increase since late 2015,
as the US's central bank backed further away from emergency policies that
helped heal the economy after the Great Recession a decade ago.
The hot economy will
continue to put upward pressure on rates. Rates are good right now as well as
our growing economy currently. This is a perfect time to get your foot in the
door on lower interest rates before they rise again. Locking in your rates
secures your payments and future in your new home. A mortgage Rate Lock is a
guarantee that the lender will deliver a specific combination of interest rate
and points if the mortgage closes by a specified date. A point is a fee or
rebate equal to 1 percent of the loan amount. Frequently, rate locks last for
30, 45 or 60 days, but they can be shorter or longer.
Many mortgage consumers wonder what the economy has to do
with mortgage rates.
Summing it up with one word: everything.
Mortgage rates tend
to be higher when the economy is doing well. That’s because inflation takes off
and investors seek higher returns than mortgage bonds can offer.
In June 2018, the unemployment rate rose to 4.0 percent. It
was 3.8 percent in May, the lowest rate since April 2000, you must go back to
the 1960s to see unemployment rates this low. There doesn’t seem to be any
cracks in the economy. Recent tax cuts have fanned the fire, and companies are
on a hiring spree.
There are several reasons to buy a home in today's market:
1.Robust Economy
2.Interest Rates are still low
3. A surge in Housing Market Inventory (more homes to choose
from)
4. Great Mortgage Packages available, even for the first-time
home buyer
One of the most listed reasons is pouring money into rent
which ends up in the pockets of someone else instead of your own. Is it time
for you to get out of someone else's home ?and into your own? If so, now is the
time to take that step, a booming economy allows buyers ease of finding their perfect
home more now than years before.
Contact Me, to see how buying a home can save you money and bring you great financial benefits too!!
Kristi Fenton
Real Estate Broker
217-617-9083-phone
217-224-8100-office
Kristibroker@gmail.com - Email
I want to extend the same friendly welcome to you also-with help purchasing or selling a home... so let's get started.
