Yesterday, December 16, 2015, the Federal Reserve (the Fed) announced it was raising interest rates by 25 basis points. This means that it is increasing the target for short term interest rates to a range of 0.25% to 0.50% from a range of 0% to 0.25%. The move was particularly noteworthy because it marked the first time in 9½ years (since June of 2006) that the Fed has raised interest rates.
Most of the big banks, including Citibank, Wells Fargo and JPMorgan Chase followed the Fed’s move by increasing their prime lending rates from 3.25% to 3.5%, effective today. The rest are expected to follow suit shortly. The question for all of us consumers out there is: how will this affect my wallet/purse/bank account?
Although the answer to that question varies depending upon your personal situation, the general answer to the effect of this one ¼% rise is “Not much, for most of us, in the immediate future.”
The more important question for home owners in West Palm Beach, Ft. Lauderdale, Miami, Tampa, St. Petersburg, Clearwater or anywhere else in the state of Florida: is this a one-time event, or a change in policy by the Fed that signals more interest rate hikes ahead in 2016. Some economists, journalists and forecasters are predicting that this is just the beginning of a series of tightening moves by the Fed. If that is the case, then the effect, particularly here in Florida, will be significant.
Why? Because as we saw in 2008 through 2010 and even into 2011 and 2012, our local economy is particularly sensitive to what is happening in the real estate market. The economic crisis which was largely brought on by the collapse of the housing market hit Florida harder than almost every other state in America.
Only in the last two years or so have we seen our housing market finally bounce back (house prices went up 8.7% in Florida last year, the 3rd fastest growth rate amongst states, according to an article on businessinsider.com). A significant rise in interest rates could cause the housing market to slow, which will most likely cause our local economy to slow or even go in reverse again. To read the entire article ranking the economies of all 50 states and Washington D.C. please go to: http://www.businessinsider.com/state-economy-ranking-july-2015-2015-7
That is the most important question to people who are involved in the real estate market here in Florida; particularly those of you who are already in a precarious position with your current mortgage or home equity loan. Sustained increases in interest rates could push you over the edge toward foreclosure.
Before that happens, you need to talk with a law firm knowledgeable about getting your loans modified today. Or, you may need to explore your rights in foreclosure defense. If you need help with any type of problems you have with your mortgage or any other home loan, contact us at Korte & Wortman, P.A. now.
Korte & Wortman is a law firm specializing in all aspects of foreclosure including bankruptcy, mortgage debt, short sales, loan modification, predatory lending practices and Dodd-Frank Act violation litigation. We have had excellent results working with a number of clients to help them stave off foreclosure and save their homes by getting them the mortgage modifications and/or foreclosure defense they need. Check out a few of our many success stories on our website at http://foreclosurefactor.com/results/loan-modification-results/.
Our home office is based in West Palm Beach, at 2041 Vista Parkway, Suite 102. You can call us at (561) 544-7071, stop in to our office, email us at vdinapoli@kwlawfirm.com or come to our website. Our firm represents clients throughout the state of Florida and across the eastern seaboard. We also have offices in Sunrise and Clearwater, Florida.
korteandwortmanpa.wordpress.com 