HIGHER INEREST RATES.
Higher interest rates can give the push you need. Many economists are expecting interest rates to continue to increase throughout the next year by a total of 1 percent, and while they are small, steady increases, getting a mortgage on the lower end is always a better idea than waiting and paying more.
Steve Rick, chief economist for CUNA Mutual Group, which builds financial products for credit unions nationwide, says that extra push to get homebuyers and other consumers moving in the market could serve as an additional stimulus for the economy.
“We could see faster economic growth next year because the Fed is raising rates, because it will help with confidence, and it will help with people trying to get ahead of the rising rate environment,” Rick says.
Increased rates can help keep house appreciation in line with wage increases. As housing markets continue to recover from the recession, home values have been appreciating rapidly, outpacing wage increases and making it more difficult for everyone to afford them.
“When you raise rates you slow down the pace of house price appreciation,” Fleming says, noting mortgage rates will go up regardless of the Fed’s decision. By slowing the increase of home prices, the same people who could afford one house today will likely be able to afford the same house down the line, without being edged out by rapid property appreciation.
