The Federal Reserve raised interest rates before 2015 concluded. But prospective home buyers aren't showing any less interest in pursuing free home values, a newly released survey suggests.
7 in 10 home buyers won't be swayed
In December, the central bank raised short-term interest rates by a quarter percent. This sometimes affects how much people spend on their loans, particularly those pursuing a mortgage estimate. More than a month later, the Fed's decision has proven negligible. However, even if there was an impact, prospective buyers wouldn't have been swayed, the Zillow poll discovered. Approximately 70 percent of respondents said the Fed's decision wouldn't impact their home buying likelihood
Erin Lantz, vice president of mortgages at Zillow, said buyers who wouldn't be cowed by short-term interest rates rising made a smart move.
"There is no need for future homebuyers to feel that they've missed the ideal window of time to purchase a home," Lantz explained. "It's important to remember that while a hike would result in higher rates than we have been accustomed, they are still historically low. Mortgage rates are an important factor to consider during the home buying process, but personal considerations about the home type and location should trump concerns about moderate rate changes."
"Mortgage rates could reach 4.5 percent by the end of the year."
By the middle of next year, financial experts believe mortgage rates may rise to 4.5 percent. That's up more than a half-percent from where they are now, based on the most recent Primary Mortgage Market Survey data. Nevertheless, aspiring buyers say this won't assuage their pursuit of mortgage quotes online, the poll found.
The Zillow analysis was performed over a three-day period, from Nov. 30 to Dec. 2, among 1,000 adults. The Fed made its announcement on Dec. 16. Through the first three weeks of January, 30-year fixed-rate mortgages now average 3.85 percent. That's down slightly from the previous seven-day period, but up from roughly 3.6 percent from the same period last year.
Fed continuing rate hike unclear
Lantz noted that the 0.25 percent uptick in short-term interest rates is ultimately a drop in the bucket. In other words, it's unlikely to make any major changes to 30-year FRMs. He cautioned, however, that this may change if the Fed decides to hike rates on multiple occasions. The Fed meets once a month, known formally as the Federal Open Market Committee meeting.