The 3 planned rate hikes won’t necessarily have an affect on mortgage rates. The FOMC and federal fund rate don’t regulate mortgage rates. Mortgage rates are more subject to inflation, regulation, economic growth, supply and demand. So, with the federal rate hikes, we don’t know if mortgage rates will increase too. In late 2015, there was a rate hike and mortgage rates dropped .5%.
However, with the improving economy, increase in inflation and the likely hood of loosening regulations, interest rates will likely rise over the next year or two. But, this will likely NOT trigger a correction. It may have an impact on the rate of appreciation.
Contrary to what most may think, in the past we’ve seen more buying activity with rising interest rates. Looser lending standards and increase in wages can easily outweigh rate increases.
So, will increasing rates hasten then correction? Not as much as one might think.
This is great question. There are a lot of factors that contribute to the state of the RE market. I will definitely get deeper into this in next weeks podcast.