WASHINGTON — Interest rates won’t go up, at least not yet.
The Federal Reserve decided not to raise its benchmark federal funds rate Thursday. It’s a sign the Fed believes that while the U.S. economy is growing, it still hasn’t recovered enough from the housing crash.
The announcement came at the end of the Federal Open Market Committee’s (FOMC) two-day meeting in Washington.
The committee acknowledged the economy is improving, citing slightly higher expectations for gross domestic product and a lower unemployment rate than three months ago, but the Fed said low levels of inflation are still a problem. The committee is also keeping a close eye on the world economy.
“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the FOMC said in a released statement.
In real terms, the decision not to raise rates means home buyers will have a bit more time to lock in the current low mortgage rates before rates go up.
“Those planning to get into the housing market in 2016 may want consider a home purchase before the end of 2015,” said Jonathan Smoke, chief economist for realtor.com. “When rates go up, not only will monthly mortgage payments increase, that increase will also lessen some buyers’ ability to get approved for a home loan – due to an increased debt to income ratio.”
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