It’s still inexpensive to get a mortgage.
Federal Reserve Chairwoman Janet Yellen announced Thursday the Fed would leave short-term interest rates unchanged.
The decision will keep home borrowing at historically low rates.
That certainly doesn’t hurt homebuying. The Fed’s expectation that it will soon raise the rate slowly is also unlikely to slow purchases, said Sandy Robertson, Bank of America senior vice president and regional sales executive for Florida and Tennessee.
“We probably have some room to grow,” Robertson said. “That 4 percent isn’t a magic number. We can move up a little and still be fine.”
The average 30-year fixed interest rate for a mortgage currently hovers at 4 percent. While mortgages rates aren’t directly tied to short term-interest rates, they do indirectly correlate.
The Fed has left the short-term rates close to zero since the beginning of the 2008 financial crisis and a possible rate hike has loomed for years.
Still, many analysts believed in 2015 a rate increase would become a reality and the Fed signaled in July that rates could go up in this month.
At a news conference Thursday, Yellen said a slowdown in China’s economy, low oil prices and a strong dollar have softened expectations of rising inflation, at least for the short term.
In announcing the Fed’s decision, Yellen noted the “economy has been performing well” and Fed officials have “not fundamentally altered (their) outlook.”
A majority still believe it will be appropriate to raise rates later this year.
Robertson said he believed rates would continue to be low. Just the possibility of a small increase has served as a reminder though, that rates will go up at some point.
“It may have started to move people off the fence,” he said. “If you’re considering buying a home, it’s a good time to be buying.”
The possibility of rising interest rates isn’t the greatest drag to homebuying. A delay in first-time homebuyers getting into the market is having a bigger effect, Robertson said.
Even so, the Florida market is looking better than it has in years, he said.
“There was a time when you thought the inventory in South Florida would never be gone,” he said. “And now we’re talking a six-month inventory.”
In Jacksonville, single family home inventory is also at healthy levels, Robertson said.
Foreclosure inventory has dropped to the point where it’s having little effect on prices and home values are appreciating without getting out of control.
“As long as we can marry low interest rates with modestly rising housing expense, we’re probably in a good place right now,” Robertson said.
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