Over the past several months, numerous financial announcements have alerted consumers that the Federal Reserve was looking at raising interest rates in the second half of the year. All those predictions are now up for grabs, though, in the aftermath of China’s sudden roller coaster ride that threw worldwide markets into turmoil on August 24th, 2015.
Rate Hike or Not?
A pair of Fed rate hikes–one anticipated this autumn, and another expected to hit in December–would be the first upward moves on rates in about a decade. Both adjustments may now be on the ropes, due to the volatility of the Chinese market, which has caused far-reaching ripple effects across Asian, European, and US markets.
But, even before August 24th’s 1000-point drop, some financial advisors were already forecasting that the Fed would pull back on its intent to raise rates. Housing sales figures have risen steadily for year-to-year figures, with some home sales records just recently being shattered. Nevertheless, the remainder of 2015 is looking like it’ll finish weaker, with housing demand dropping significantly. While industry analysts anticipated a 0.7% increase in US new home sales, the US Department of Commerce recently reported an actual drop in sales, down by a head-turning 6.8%.
With America’s steady trajectory of stable economic growth now interrupted, the Fed is leaning back in its thinking chair, taking in a deep breath, and surveying the situation with a cautious eye. Raising rates now could possibly trigger serious repercussions in the stock market. Holding off on rate hikes seems to be the prudent choice.
Real estate will benefit by continued low rates, as that enables more buyers to get a loan, which moves more property so take a hike, rates. These buyers will likely tread more lightly than their early-2015 counterparts, with a bit more caution in their step. Are you in the market? Give us a call, Let’s talk.