America’s central bank, also known as the Fed, for many weeks now has been hinting towards and leaning towards increasing interest rates, however due to Hurricanes Harvey and Irma any rate increases may be delayed until December 2017. By postponing any action now, the Fed will have ample time to assess the effects of the Hurricanes on the Economy.
We’re already in a glacial paced, but steadily improving economy, but now the Fed is faced with something we have never experienced in the past, two Category 4 Hurricanes hitting the country in the same year, almost back to back.
With better and quicker response from insurance companies coupled with Federal Agency relief monies, rebuilding will begin to take place sooner rather than later. With an already existing shortage of labor in the construction industry, housing demand is sure to outpace supply. This will put pressure on the housing industry; the supply of homes will continue to remain tight. New home builders won’t be able to fill the demand gap due to conservative bank lending policies and not enough laborers. Historically speaking, it is a pretty good bet that we’ll see higher rates than we have now within six months to a year. Rates have increased more often than not after each major hurricane, especially the more recent storms. Mortgage rates should stay under five percent, but that rate will creep up between four and five percent.
Something to think about if you are considering refinancing, purchasing or remodeling in the next six to twelve months.