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February 1st, 2016 at 10:00 am

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The good news: Adjustables are low and it’s a seller’s market

The Federal Reserve Bank’s decision to raise its benchmark interest rate by .25 percent has been the talk of the financial and real estate world since it was announced last Dec. 16.

To gain some insight, we asked David M. Cabot, our President and CEO, for his take on the situation.

Q: Why did the Federal Reserve Bank raise the rate?
A: The Fed was waiting for the economy to be stronger, and they believe it is now. The rate determines what the banks pay to borrow money from the Fed. But the banks can set their own rates for consumers, and they do. This is the first rate increase in seven years.

It’s interesting that they made a decision to do it now because they’ve been wanting to for over a year. I’m not an economist, but 2 percent economic growth is very, very modest. If we were growing at 3 or 4 percent, an interest rate hike would be a welcome thing in the business world. But at 2 percent, we’re not really certain. If we don’t start at a point where we have some growth, we’re never going to get above zero. It’s probably a wise thing from a macroeconomic point of view.

To learn more, download the full report.

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