A long-awaited interest rate increase—and one may come this summer—is unlikely to dissuade shoppers from buying homes.
The Advertiser reports that’s the consensus of local real estate professionals and other interested onlookers of the economy, national and local.
Federal Reserve officials have indicated in a recent meeting that short-term interest rates may rise, an indication of growing confidence in the American economy. Chances are they may rise in June, more likely in July.
“We’ve been living in an environment for about eight years where interest rates have been artificially low,” says Bill Bacque, president of Van Eaton and Romero real estate in Lafayette. “The unusual for interest rates has become the usual.”
Suggestions of an imminent interest rate increase have lingered since last autumn but did not materialize. This time may be different.
“The central bank believes the economy has improved,” says Rajesh Narayanan, chair of the finance department in LSU’s E.J. Ourso’s College of Business. “It’s a sign that things are getting better.”
In fact, interest rates have lagged since the Great Recession of 2007 to 2009. The Fed has kept rates at historic lows, making it cheap to borrow money and encouraging home sales.
“Mortgage rates have been low; corporate rates have been low; everything has been low,” says Narayanan, adding he believes the Fed will encourage a gradual, incremental rise if they try to raise rates this summer.
