Convenience store owner · Nacogdoches, TX · Member since 2015 · 17 posts · 1 vote
The title says it all. They're expected to raise rates another .75% over the next year so curious what impact that will have on real estate investments. I'm brand new with no investments yet but wanting to play the market correctly to try and avoid catastrophe early on in my investing career.
Houston, TX · Member since 2016 · 349 posts · 142 votes
9y
@Clay Walker It will have multiple effects on the overall economy but the most direct effect will be the rise of rates for refinancing out of hard money loans. This will make holding costs rise but it also reflects a strengthening of the economy. A stronger economy means more jobs and money so it means more end buyers. Like everything else in life, there are positive and negatives.
Rental Property Investor · Lake Worth, FL · Member since 2016 · 29 posts · 16 votes
9y
Hey @Clay Walker, I have a background from Wall Street, but the following is just my opinion: The Fed said in 2015 that they'd raise rates 3 or 4 times in 2016 but only did it once (there are various reasons for why). My sense is rates will rise maybe .25% or .5% in 2017. I think the effect this will have is to slow the rise in prices. As the cost of money goes up, the economics of various properties goes down since your monthly payments go up, so buyers should become less aggressive.
I think the rate increase will slow the rise in prices not necessarily cause a market correction, in that prices will go up more slowly not come down. The economy is still healthy, and interest rates are relatively low...so good times, with decent price appreciation will probably stay through 2017. I think toward the end of 2017 (3Q or 4Q), is when you should definitely check in on the health of the economy / market again (or just generally keep an eye on the pulse constantly).
Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
9y
I would search around the forum. This has been asked fairly frequently and it seems the most likely answer is: nothing changes. Mortgage rates are tied mostly to the 10 year bond, and the rate hike is mostly affecting the bank to bank lending.