OpinionIndustry News

Don’t worry about Fed rate hikes

Guest perspective: Housing still vibrant

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You should not have been surprised that mortgage rates did not change last week after the Fed announced a 25 basis-point increase. Rates essentially remained unchanged because mortgage rates already incorporate the assumption that the Fed will continue increasing rates. The following chart shows how mortgage rates moved down only slightly while the Fed was dropping rates from 2001 through 2003 and, conversely, we believe rates will tend to move up only slightly as the Fed continues to raise mortgage rates. There are other factors that could cause rates to rise, but don't expect the Fed to be the primary culprit. Mortgage rates are based on a long-term outlook because most buyers of mortgage rates are looking at a 10-year horizon (the average time it takes for a mortgage to be refinanced/paid off). Our grading system of the economy and the housing market is a "bell curve" model, with statistics at an all-time high receiving an "A," statistics near the long-term average receiving a "C...