Boston Real Estate

Fed Leaves Interest Rates Unchanged - Signals No Increases for 2019

Fed Leaves Interest Rates Unchanged - Signals No Increases for 2019

On Wednesday, Federal Reserve officials scaled back on their proposed interest-rate increases this year to zero. They decided to leave its benchmark funds rate unchanged, in a range of 2.25% to 2.5%.

Last December, committee members estimated two rate hikes in 2019. Now, it appears that there will be none; unless conditions change significantly. In a post-meeting statement, the committee cited slower economic growth and declining inflation as the reason for leaving rates unchanged.

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"Patient means that we see no need to rush to judgment," Fed Chairman Jerome Powell said in a press conference after Wednesday's decision. "It may be some time before the outlook for jobs and inflation calls clearly for a change in policy."

Home buyers will want to consider the savings that come with low interest rates, particularly over the life of the loan, or even the partial life of the loan.

What does this mean for you? On a 30-year fixed-rate loan amount of $200,000 at 5%, the interest paid over the life of the loan is $186,512. That brings the total loan payments to $386,512. At 6%, the amount of interest paid rises to $231,676, a 24% increase. At 7%, it’s $279,018, a 49% increase. The lesson here: Keep in mind, what might be gained from a further drop in housing prices could easily be lost by a rise in interest rates.

With unchanging interest rates, 2019 is expected to be a great year for home buyers. If you're considering a move, we welcome the opportunity to set up a private consultation to review a strategic real estate plan for you.

The Bushari Team

617.245.8200 | hello@bushari.com

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