“The Fed is always trying to balance and making sure the economy is moving and stimulated, but on the other hand not letting it get into overdrive so that there’s inflation so it’s a constant balancing act,” said Director Of Community Relations And Housing Counseling, Joel Doelger.
Interest rates are increasing yet again.
According to finance experts the quarter of a point raise is a sign that the economy is getting stronger.
One major area the hike will affect is housing affordability.
“Prices in Northwest Arkansas since their fall in 2011 have actually increased by 50 percent but wages have not increased by 50 percent. So you think of Arkansas as a very affordable place to live but that does start to alter the affordability of living in Northwest Arkansas,” said Co-Owner of Limbird Real Estate Group, Tara Limbird.
The average home in Northwest Arkansas costs $235,000. But with the rate increase Co-Owner Of Limbird Real Estate Group,Tara Limbird said that number could go down.
“Affordability becomes an issue and it drives down prices for the homes because sellers sometimes have to decrease their home price in order to get the buyer back in it,” said Limbird.
Although it may seem like a small change,Limbird said it will have a major affect on home owner’s loans.
“With interest rates going up even a quarter of a percent changes someone’s payment by 40 dollars a month which a term over the loan is actually 14 thousand dollars and additional interest you’ll pay for the exact same property,” said Limbird.
Even so, Joel Doelger from the Credit Counseling Of Arkansas said don’t hit the panic button yet.
“I wouldn’t expect to see a dramatic change but it’s just something people need to be aware of what’s going on in their finances, pay attention to it and adjust accordingly,” said Doelger.
Doelger said major areas that may be of concern are non-fixed rates, private student loans and major debt. But places like the CCOA are available to help.
“People should probably think of what we can do to help them and put them on a clearer path of what we can do to improve their finances for the coming year,” said Doelger.
The Federal Reserve is expected to raise rates again next quarter but policymakers said they may not need to raise rates are quickly as in previous years.