Signs the Near-Zero Interest Environment Will End
The housing industry has enjoyed the low interest rate environment that the Federal Reserve implemented to help grow the economy. However, now that things have improved, interest rates may rise once more. Here are a few economic factors that might signal an interest rate hike is around the corner:
- Wage increases: when wages grow significantly, it shows that corporations have more confidence in the economic environment—signaling low interest rates are probably no longer needed to stimulate growth
- Job growth: higher number of employees means additional, steady income that people can use to invest in housing
- Rental demand: even though rent prices and the appetite for rental properties have experienced amazing gains over the past few years, when the wage increases and job growth come to fruition, demand will turn to housing as the workforce looks toward homeownership
Once these things occur and the near-zero interest levels begin to rise, so will the relatively low mortgage rates we’ve grown accustomed to. So if you’re looking to buy a home this year, pay close attention to the factors above and lock down your rate before the interest rates climb too high.