How Rising Interest Rates Affect You

San Diego Mortgage Podcast with Abel Tejeda

How will increasing interest rates impact the mortgage market? Most of you have heard that the Federal Reserve has increased interest rates and will continue to do so throughout the year. But what does it mean when the Fed raises rates? Today I’ll discuss what impacts we’ve observed. When interest rates increase, it doesn’t necessarily mean that there will be a direct impact on mortgage rates, which is a concern that many have in today’s market. It just means that the rate at which banks lend money to each other has increased. In this particular case, the Fed has been raising rates to slow down the economy. That trickles down into the mortgage industry. “Though rates aren’t in the twos and threes anymore, they’re still historically low.” Part of people’s shock comes from the fact that we’ve been used to rates being so slow. Though rates aren’t in the twos and threes anymore, they’re still historically low. Our rates are currently in the fours; the average mortgage interest rate is 6.5%. Back when I started working with loans in 1999, people were refinancing from 10% down to 6.5%. So what does this mean for you? Well, if you’re looking to lower your rate back down to 2% or 3%, it’s not going to happen in this market. Those times are long gone. Even still, you could use this time to refinance your loan to get rid of your mortgage insurance. Just because rates keep going up, that doesn’t mean your ship has sailed when it comes to homeownership—it is still a good time to buy a house. The alternative is to continue renting, and rent prices have been through the roof. Why pay someone else’s mortgage when you could be building your own equity and enjoying the tax deductions that come with homeownership? If you have any questions about buying a home in our current market, give me a call or send me an email. I’d love to speak with you.