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The Fed, Interest Rates, and Chattanooga Real Estate

Last week the Federal Reserve announced that it will leave its main borrowing rate near zero, citing stubbornly low inflation rates and shaky financial markets in Europe and Asia. This came as a surprise to many financial analysts, experts and even to casual observers.

Despite the announcement, many observers still expect the Federal Reserve to raise its  short-term rate, which has been held near zero since the recession of 2007-2008. A higher short-term Fed rate would eventually drive up interest rates up on many consumer and business loans–including those for real estate.

The good news for us here is Chattanooga: for sellers this should mean continued strong buyer traffic and for buyers this is a pleasant unexpected surprise that will keep mortgage rates at or near all time lows for the foreseeable future. reported that mortgage interest rates declined after the Fed made its announcement–the 9th straight week where rates have been below 9%. For a look at how the Fed’s decision impacts the economy ovreall, check out this analysis from CNBC:

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