Gauging the Impact of the Fed's Rate Hikes

Gauging the Impact of the Fed's Rate Hikes

"Even economists who, of all people, should know better". And while average US household spending has "risen somewhat", consider that average USA household debt rose by $226 billion in the fourth quarter of 2016, which marked its largest quarterly increase since 2013.

USA unemployment has dipped to 4.7 percent, which is near the level most Fed officials see as consistent with maximum employment.

The U.S. Federal Reserve could raise interest rates two, three or four times this year, said Chicago Fed President Charles Evans, though his Minneapolis colleague Neel Kashkari argued that there was no need to rush.

The U.S. central bank on Wednesday raised interest rates for the third time since the 2008 global financial crisis, with the job market strengthening and inflation rising toward its target.

On the corporate front, US-listed shares in Deutsche Bank were down 3.42% after the German lender said it will raise €8bn by selling its shares at a 35% discount to last week's closing price as it looks to shore up its finances.

These adjustable rates, he says, could rise as much as ¾ percent, which would increase the same metric as mentioned above (the monthly payment on a $200,000 mortgage) by as much as $84. "And while it is likely the announcement of that plan will not trigger much of a market response, we don't know that for certain". Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 2.473 percent.

Rising inflation is expected to drive the monetary policy decisions to come in 2017, and the expectation of two more hikes in the latter half of 2017 will likely keep impacting the real estate sector negatively. Five-year fixed-rate mortgages are available at rates as low as 2.44% for high-ratio buyers, and at rates as low as 2.49% for low-ratio buyers. If you are looking to refinance, you should be able to find five-year variable rates in the prime minus 0.45% range (2.25% today), depending on the terms and conditions that are important to you.