What is the Federal Reserve Doing?

At their recent meeting, the Federal Reserve indicators pointed to three potential increases to interest rates in 2022.  That's one more than previously planned.  Some analysts predict this may come in early spring, March or April.

What does this mean for you the consumer?  Normally we would see this passed on to consumers in the way of higher interest rates on various methods of borrowing, like credit cards, car loans and mortgages.  This could cause consumers to decrease spending.  

How does this affect the housing market?  As rates go up, obviously a borrower might afford less money to purchase or finance a home.  Instead of being approved for a loan to purchase a $400,000 home, perhaps they now can purchase $375,000.  How does this affect someone selling their real estate?  Their potential buyer pool could decrease and it could take longer to sell .... or it could affect their pricing.  

How can a consumer respond?  Nothing is for certain, but when you use such indicators in your asset planning, consider selling while your potential buyers have more buying power.  If you know you will need to sell or move in the next 6-12 months, consider not waiting but perhaps list your property and find temporary housing for yourself.  Make the market indicators work for you, but also remember, they are just that "indicators."  

Not needing to sell or move ... review your current mortgage if you have one and consider talking to a loan specialist about whether you need to refinance before rates increase (if they are lower than your current mortgage).  Many homeowners refinanced in the 2021 down turn in rates, but perhaps you could not.  Perhaps COVID and employment issues prevented that, but now you could qualify for a refinance.  Consider all your options and make this market work to your advantage as much as possible.