As expected, the Fed finally hiked the benchmark interest rate. But although rate hikes usually mean increasing mortgage rates, one industry leader is counseling calm
The Federal Reserve raised interest rates for the first time in a year yesterday – a move that may raise mortgage rates. But the head of a large lending company is counseling calm.
“The Fed’s decision to increase its key interest rate shouldn’t be a major cause for alarm with consumers,” Doug Lebda, founder and CEO of LendingTree, said in a statement emailed to MPA. “Mortgage rates offered to borrowers on our network have been increasing over the past few months, from an average of 3.6% for a 30-year fixed-rate loan in August to 4.3% as of today, which is a difference of roughly $90 a month.”
The good news, Lebda said, is that lenders have been anticipating the Fed’s decision for a long time. Indeed, most observers were fairly certain that a rate increase was coming, with a recent Reuters poll of 120 economists finding that all of them expected a rate hike.
That means, Lebda said, that lenders “have baked the likelihood of a rate hike into their loan pricing, meaning that mortgage rates are unlikely to change dramatically from where they are today.”
And a rate increase signals the Fed’s confidence in the economy.
“The good news for housing is that if interest rates are rising because of an improving American economy, consumers are seeing higher incomes, greater job opportunities and better returns on their savings, all of which will work to help counteract rate increases,” Lebda said. “With that said, consumers should still revisit their loans and evaluate their opinions while rates are still relatively low.”