As predicted by all officials, the Fed raised rates for the second time in 2018 - up .25%. The remainder of 2018 and 2019 may see more gradual hikes, with analysts predicting two more increases by year’s end in order to curb future inflation concerns following reports of a strong labor market and economic conditions.
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.