What the interest rate hike means for you
WASHINGTON (WTVD) -- For the first time in nearly a decade, the Federal Reserve has raised interest rates. They've gone from near zero to between .25 and .50 of one percent.
So what does that mean to you and big purchases like cars or homes?
"Right now, we really want to buy," said potential Raleigh homebuyer Matt Leffler, "while the interest rates are still low and that's definitely an important factor for us."
Leffler is upgrading from a starter home and has been watching interest rates closely.
"If they were going to increase in the next two years," said Leffler, "we could see an increase more than .25 percent, maybe as much as one and a half percent. So that's going to have a big impact on us."
"Historically, we're still low," said Cathy Edwards, a lender with MBV Mortgage in Raleigh. "We're not even at five percent."
Edwards expects the Federal Reserve to raise rates again.
"We had a mortgage crisis in this country. That's why the rates were so low. What people need to realize is, they weren't supposed to be this low, this long," she said.
Some quick, back of the napkin math (with some basic assumptions built in) shows that monthly payments on a $100,000 home would go up about $20; a $300,000 home would see a $45 hike; and, a $500,000 home could see a $73 spike in mortgage cost each month.
"Interest rates really affect a buyer's buying power," said Carrie Schlegel with Better Homes & Gardens Realty in Raleigh. "The amount of home they can afford changes as interest rates go up."
"How much house you can afford and when the best time to buy is, that's a huge factor for us," said Leffler.
And it's not just home loans. The cost of auto loans are expected to rise. By some estimates, if rates go up a full percentage point, it could slow car sales by more than three percent.
