RALEIGH, N.C. — The Federal Reserve interest rate hike will affect Americans in a variety of ways, including home buying, car loans, student loans and more.
What You Need To Know
The Federal Reserve raised interest rates three-quarters of a percentage point on Wednesday
Mortgage broker said homebuyers shouldn't be scared
Brian Grubbs is the president and CEO of the Raleigh Mortgage Group
The interest rate increase is the biggest in more than 20 years.
The move by the U.S. central bank is to address inflation.
“The labor market is extremely tight, and inflation is much too high. Against this backdrop, today the Federal Open Market Committee raised its policy interest rate by 3/4 percentage point and anticipates that ongoing increases in that rate will be appropriate,” Federal Reserve Chairman Jerome Powell said Wednesday during a news conference.
A mortgage broker said it’s not the end of the world for potential homebuyers.
“The rise in interest rate really doesn’t make a monthly payment that much more,” said Brian Grubbs, the CEO and president of the Raleigh Mortgage Group. “The rise in interest rate has leveled the playing field a little bit just because we have gotten some of the corporate people out of the way.”
He said potential homebuyers will have to take more into consideration when deciding on a purchase.
Grubbs believes it’s all about how you tackle the home-buying process.
“We stay busy man," Grubbs said.
Grubbs has been helping families with the mortgage application process for more than 20 years.
“In past years with interest rates being so low, people were able to buy their dream home at the very first purchase,” he said.
That may change. The median homebuyer might have to take more into consideration. The interest rate rise is going to push up the monthly payment, and the cost of living will go up for people in the Triangle.
“We’re still in a seller’s market. I mean it’s an amazing time to sell a house, but it’s tougher to purchase one right now,” Grubbs said.
Availability of homes in the market is partly why. The 20% jump in property values has been largely due to the influx of people moving to this part of the state.
However, he said do not let those influences curb your enthusiasm for searching for a home.
“I know we’re in a rising interest rate environment, but I think it’s a sign of a healthy economy,” he said from his desk in north Raleigh.
The mortgage guru said people must understand certain factors affect what a home seeker receives. Credit score, home sales price, loan amount, value of the down payment and length of mortgage all come into play.
“Over the last several weeks we have seen a lot more buyers be able to get under contract,” he said.
Before rate hikes, some interested homebuyers may have had a little more wiggle room.
The more money you put down generally means the better your interest rate will be.
“I wouldn’t let an interest rate keep me from buying a house right now,” Grubbs said.
He advises buyers to think about the different types of mortgages available and shop around until you find what’s right.